Met an interesting investor today

[Matthew Paul]

I stopped by a house a buddy of mine was tearing down for a landlord . The owner shows up while I am there , driving a mid 1990's conversion van . I told him I had some rentals and asked him why he was tearing it down it was in ok shape and in a nice school district .  I do things a bit different .  I buy the old houses in a good school district and decent area , I pay cash and I get fair deals , not great , but fair . So then I do the bare minimum to get them rent ready . And you know this area , everybody wants the schools , so I get $ 1500 a month . i rent them for 5 or 6 years , then I tear them down and build whats next door , I own the next three  ( houses are $ 400K )  Now I got all that rent , that pays for me to build the new house .  Now I rent the new house for $ 2700 a month and its new . I do it all cash . I have 52 houses around here , 16 are old and on the list to tear down and rebuild . But while they are on the list they are making money .  I buy 2 or 3 a year as I go .  I am my own bank , and I only hire local contractors . I keep the money in the community .  I have been doing this for 20 years and havent taken a loan on a property other than my own house . 

I asked him "why dont you sell them ?"   Heres why , if I sell a new house I net after taxes and all the BS around $60K , If I rent them I make that in 3 years , depreciate the property and in this area its good appreciation . They are paid for so its great cash flow . If I sell it what do I have ?  A fist fullof dollars . 

He tells me he gets a house built in 3 to 4 months , his contractors come running when he calls , he cuts a check when the work is done , he pays market rates because he knows these guys give him 120% . But if they screw him it only happens once . 

Tells me he could sell it all and kick back , but he would be bored , tells me its fun , he has to do something .

I asked him about tenant problems , he laughs and points to his wife , and says " there is my pit bull , dont touch her food . A very nice looking 68 year old grandmother .  She basically said , " no pay , no stay , no excuses ....period" 

Learned a lot in the hour or so .