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.  

[Steve Vaughan]

Quote from @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.   

Thank you for the history, Don. 
Nickerson was definitely the OG of mom and pop residential REI.
I have his 1st book.  Funny to see the PPs, rehab costs and rent rates from the late 50s but sound advice for sure. 

[Jay Hinrichs]

Don I grew up in the tax sale land business.. And exactly that was starter RE in the day.

we marketed 50.00 down 50.00 a month owner carry LOL of course rates were 10 to 20%..

I pulled out my old amortization book and the lowest rate in the books was 6%  ..

U know the amortization books the title companies used to give us..

So now the how too gurus are just rehashing what your talking about.. buy tax sale sell on contract and spend 10k to learn how.. not all land sale how to guys are that expensive I think one can buy a program for maybe a few grand and probably worth it.

I fund a few land flippers today and they use the same concepts that we did 40 to 50 years ago and the gentlemen your talking about 60 plus years ago.. The big difference today is we dont have to carry paper.. we buy for cash and sell for cash.. its a very narrow niche of course.. and the marketing is just like any of the wholesalers big spend on out bound .. and guys/gals that can close a deal on the phone.. I like it pretty easy for us to manage and fund.. My clients that do this actually do quite well and by quite well i mean 250k NET a year or better. .. far better than your average wholesaler. that is competing with a hundred other wanna be wholesalers for those same beat up inner city homes :)

[Don Konipol]

@Jay Hinrichs. My personal preference is that when a real estate INVESTMENT becomes a BUSINESS, I sell and move on to a new investment arena.  Why?  Because I do not want to run a business, I want to spend my time evaluating, negotiating, and maximizing investments instead.  But for those who do want to run a business the land purchase and sell or sell on terms can provide a good income.

[David Krulac]

I've had the pleasure of meeting Williams Nickerson, in person saw him speak and chatting with him.  He worked at The Bell Telephone Company and started investing part time on the side. He actually started in the 1930, He was born in 1908 and passed in 1999.  After the first book was published, he went on tour to book stores and other locations promoting his book. 

He combined working with Al Lowry and taught a real estate seminar series, over 10,000 people had attended their various seminars across the country. Later, he took common asked qustions from the book tours and wrote another book. His second book "How To Make a Fortune Today Starting from Scratch", which contained many commonly asked questions and his answers.

Nickerson has been an inspiration to me in my investing career, and later was an inspiration for me to write my real estate book.  He is and always will be Godfather of real estate investment, epecially for new and small investors.