How Small Time Residential Real Estate Investing Became a “Thing”

[Don Konipol]

Before 1957, there was no industry or investing arena defined as residential real estate investing.  Individuals owned their own home, or a duplex in which they were both owner occupant and landlord.  Real estate investors were full time real estate business people who owned larger type properties.   The few individuals investing in real property in a small way were few and not organized into any recognizable grouping.

In 1957 Bill Nickerson’s book “How I Turned $1,000 into One Million in Real Estate in My Spare Time” was published.  This became the “bible” for the buy, rehab, rent devotees.  Nickerson added “exchanging” real estate to upgrade to larger holdings without paying capital gains tax to his formula, and a number of other books were written about the subject in the next 10 years.  In or around 1961Nickerson had tried to capitalize on the success of his book by promoting seminars, but to a large degree was not very successful.  So he continued to concentrate on his property investments while periodically updating his book.

In 1968 one of Nickerson’s followers, Robert Allen, had some success modifying the Nickerson formula to include structuring real estate purchases with no down payment or capital contribution on his part.  Allen determined that the no down payment concept would have tremendous appeal to people wanting into real estate but who had limited or no capital to invest.  He started Robert Allen “Nothing Down” seminars, which were wildly successful at drawing paying attendees.  Local investors were encouraged to, and did form RAND clubs (Robert Allen Nothing Down) locally.  The idiocy inherent was typified by how these clubs meetings opened; participants volunteered their latest nothing down property purchases, with the only criteria being the purchase price.  Other participants would ‘applaud loudest for the “largest” nothing down purchases, regardless of whether or not the purchase price paid was well above market value, had a large monthly negative cash flow, or was a property that had no other use than as a “recreational” lot.  

Nickerson, seeing Allen’s success, was itching to get back into the seminar business, but he was not a marketing type person.  The answer was his teaming up with Albert Lowery, an investor who got his own start reading Nickerson’s book.  The Nickerson - Lowery seminars were born, with the names later reversed to the Lowery - Nickerson seminars.  The emphasis was on classic buy - fix - rent.  A few years later Nickerson “retired”, Lowery wrote his own book, and included “flipping” properties - what’s now referred to as “wholesaling”.   

By 1979 real estate investment clubs had started in major metropolitan areas, with many absorbing local RAND clubs. These clubs provided a setting for real estate investors wishing to share their knowledge (books and tapes available for purchase at the back) and introduce a prelude to seminar offerings.  The two earliest popular and successful “gurus” were Jimmy Napier, whose speciality was investing in notes, mobile homes, and real estate “exchanging”, and John Beck, whose speciality was tax auctions, and complex series of exchanges in which John used near worthless lots acquired for pennies at tax auctions at full tax assessed value for exchange purposes, usually as a downpayment, or as collateral for a private note. As a side note, John Beck’s presentations were so complicated and John was in any case extremely difficult to follow.  Any question John Beck answered tended to lend to more confusion rather than clarify a point.  In one particular meeting I attended Jimmy Napier goes up after John Beck and rather than make his own presentation offers to clarify questions concerning John Becks presentation.  

Those early (1978-1984) real estate club meeting were a lot of fun and a lot of real, useful good knowledge was exchanged.  Further, for a $300 - $400 investment you’d get a complete course on a particular investing methodology and the “mentor” who sold you his books and tapes would take your phone call personally and answer any questions you had.