How to find an opportunity that everyone else has missed. You see with your mind what others miss with their eyes. For example, a friend bought this rundown old house. It was spooky to look at. Everyone wondered why he bought it. What he saw that we did not was that the house came with four extra empty lots. He realized that by going to the title company. After buying the house, he tore it down and sold the five lots to a builder for three times what he paid for the entire package. He made $75,000 for two months’ work. It’s not a lot of money, but it sure beats minimum wage, and it’s not technically difficult.
How to raise money. The average person only goes to the bank. This second type of investor needs to know how to raise capital, and there are many ways that don’t require a bank. To get started, I learned how to buy houses without a bank. It was not so much the houses, but the learned skill of raising money that is priceless.
All too often I hear people say, “The bank won’t lend me money.” Or “I don’t have the money to buy it.” If you want to be a Type 2 investor, you need to learn how to do that which stops most people. In other words, a majority of people let their lack of money stop them from making a deal. If you can avoid that obstacle, you will be millions ahead of those who don’t learn those skills. There have been many times I have bought a house, a stock or an apartment building without a penny in the bank. I once bought an apartment house for $1.2 million. I did what is called “Tying it up,” with a written contract between seller and buyer. I then raised the $100,000 deposit, which bought me 90 days to raise the rest of the money. Why did I do it? Simply because I knew it was worth $2 million. I never raised the money. Instead, the person who put up the $100,000 gave me $50,000 for finding the deal, he took over my position, and I walked away. Total working time: three days. Again, it’s what you know more than what you buy. Investing is not buying. It’s more a case of knowing.
How to organize smart people. Intelligent people are those who work with or hire a person who is more intelligent than they are. When you need advice, make sure you choose your advisor wisely.