Developer · Garland, TX · Member since 2008 · 8k+ posts · 4k+ votes
14y
It's not rocket science. The key is to consistently execute over 20-30 years. Nickerson was persistently goal driven from an early age. One summer when he was in his teens, he hiked from his home in Fresno, CA to Iowa, and back again.
Developer · Garland, TX · Member since 2008 · 8k+ posts · 4k+ votes
14y
I received this message in my YouTube mail in response to the video above:
"I found your post on Bigger Pockets. I'm also reading the book since I told my wife I wanted the book for Christmas. I've invested for a few years in my spare time but have a question. I haven't read too many pages of the book yet, but isn't what the author of the book describes almost like flipping? I'm about to close on a property now that I plan to fix up since there are a lot of cosmetic issues that need repair and this may fit into the category of fixing it up, selling for a higher price and then buy a larger property."
I don't recall Nickerson addressing what we would call flipping today. Though it certainly must have been done 50 years ago, flipping was by no means a main stream strategy.
I've heard the term "slow flip" in the past. This was defined as buying a property, rehabbing it (if needed), renting it out, and selling it after at least a year to qualify for long-term capital gains treatment. I won't get into the validity of the tax status, but that aside, this method may have merit.
Nickerson wasn't fixiated on holding a property for as short a time as possible, but more as a vehicle to getting to the next bigger and better property. He uses a two year time frame as a goal, but many times he held properties for much longer.
A better criteria for trade up time might be when substantial value had been added to property A, he would then be ready to roll that value into property B.
Example: (I'm changing the numbers to today's dollars so they won't distract too much). He buys a 4 unit property for $120K that rents for $1000 a month, or $12K a year. It is underperforming because of deferred maintenace and poor management, but is in a good area. He fixes the property, upgrades the 2 vacant units, evicts the slow/no paying tenants(s) and within a few years is renting all 4 units for $750 each, or $36K a year.
When he bought this property, he put $30K down on a 15 year loan. Now he owes about $75K. He sells if for $200K and has $125K in proceeds to roll into his next deal, which happens to be a 12 unit property 3 blocks away that is also distressed, like his 4-plex used to be.
As I said, not rocket science. Is this flipping? No, true flipping wouldn't typically invove any tenants and would be done as quickly as possible to keep turning your investment dollars.
Investor · San Ramon, CA · Member since 2011 · 1k+ posts · 569 votes
14y
Jon, sounds similar to the buy/fix/refi/hold strategy I would like to implement.
Buy under performing properties, fix them up, refinance out your investment (plus some potentially), and hold as long term rentals. Use the cash out from the refi to repeat.
I prefer the long term passive income to the short term cash bump. Avoids tax implications plus the 10% or so sales cost. Should build more wealth ultimately.
Developer · Garland, TX · Member since 2008 · 8k+ posts · 4k+ votes
14y
Nathan, I think he would say that he's not so much looking for a cash bump, but an expedient path to a substantially better property with enough value capture to do the trasactions. And i totally agree on the cost and hassle of selling/buying and dealing with the logistics of 1031 exchanges. The new opportunity needs to be good enough to overcome the dual transaction costs/work.
I think a question we must continually ask ourselves about any of our properties is: Is this property the highest and best place for my money? I recognize that one might say yes and another no to the question.
Real Estate Investor · the villages, FL · Member since 2008 · 5k+ posts · 3k+ votes
14y
I remember early in my career reading his first book titled how I turned $1000 into $1 million in my spare time. I even showed it to my wife and we both became very excited. I'm sure this book was one of the reasons I became completely involved in the real estate game. I owe thanks to the author. I have used many of his methods both in the initial stages of my career and throughout the past 40 years. Rich
Real Estate Investor · Los Angeles/Santa Barbara, CA · Member since 2011 · 102 posts · 14 votes
14y
Great stuff Jon Klaus! I like that this system is a measured, almost fail-safe method to acquiring and building wealth over time-with discipline & consistency of course. Thanks.
Real Estate Investor · the villages, FL · Member since 2008 · 5k+ posts · 3k+ votes
14y
I received 2 e-mails asking what I accomplished after reading the book. I was able to start with LESS than $1000 and eventually acquire more than the 5 mil. Rich
I'm having trouble watching the video due to the constant motion of the camera. Are you holding it in your hand? If not, what's causing that constant motion?
I'm having trouble watching the video due to the constant motion of the camera. Are you holding it in your hand? If not, what's causing that constant motion?
Sorry, I was holding my iPhone. Just listen to the audio?
Real Estate Investor · the villages, FL · Member since 2008 · 5k+ posts · 3k+ votes
14y
I haven't tried this myself but it might be fun to compare his original book of how I turned $1000 into 1 million compared with his book on how I turned 1000 into 5 million. I do know that book was written quite a while ago and I wonder what he is done since then. I know I ran into the same problem with my book and have been forced to update it each time it has been re-presented. Rich
Investor · Valparaiso, IN · Member since 2011 · 103 posts · 65 votes
14y
Originally posted by Jon Klaus:
Sorry, I was holding my iPhone. Just listen to the audio?
I came back to it later & was able to finish it. :) Maybe it's time to order a cheap iPhone tripod off Amazon? :)
BTW, thanks for the introduction to Nickerson. A little Googling makes it sound like he's one of the few "gurus" to have played it straight & not relied on gimmicks.
Investor · Los Angeles, CA · Member since 2011 · 242 posts · 61 votes
14y
Great video with clear explanations. Way to promote BP! I have been recommended this book before in the past and here about it again. I better get my hands on a copy soon.
Investor · El Paso, TX · Member since 2009 · 163 posts · 20 votes
14y
I got mine around Christmas for $50. Sanjiv is right, you have to just keep you eye out for the book on ebay as well as Amazon. When I first saw the book on Amazon it was listed for about $24 and then it was gone within days.