June 15, 2020
Thanks to the passing of a recent law, you’re now able to get in on real estate deals that for 100 years were only available to the richest Americans.
The experts at the Center for Financial Markets call it “one of the most ‘momentous’ and ‘rare’ exemptions in the securities laws since the Security Act itself was signed in 1933.”
But here’s the crazy part…
As groundbreaking as this development was, most Americans have no idea it happened!
Few folks know that this law was passed. And those who HAVE heard of it don’t realize that it opens up an entirely new world of investment options for ordinary Americans.
And now, financial expert Dr. Steve Sjuggerud shares the first of three rules that he’s used personally to make millions for himself and his family…
The No. 1 Rule for Success in Real Estate
By Dr. Steve Sjuggerud
Most people start in real estate with their first home. They’re called starter homes for a reason, after all…
For me, it started with surf trips in the early ’90s.
You could say I did things a bit differently. I couldn’t help myself.
I didn’t set out looking for deals on property. But against all odds, I realized something that planted the seed. And by 1999, I was having an awkward conversation with my wife.
“I need to buy a beach front lot in Nicaragua,” I told her. We hadn’t even bought our first home yet. She wasn’t amused. But I’d thought this through…
You see, I had been taking surfing trips to Nicaragua since 1993. I found a wave that I believed would someday be one of the hottest destinations in the world. It was that good.
That’s why at 28 years old, I thought I’d unlocked the code. I was going to buy a lot – right by that wave – and build a house on it. I was sure that location would be a big deal in the coming years.
Amazingly enough, my wife agreed. We closed on a strip of dirt in a foreign country for $15,000. That was more money back then than it is today… And for us at the time, it was a LOT of money.
To the best of my knowledge, I was the first person to build a home at Rancho Santana, Nicaragua. I was right about the wave, too. The hot spot, Playa Popoyo, has since hosted the International Surfing Association world championships multiple times.
My plan was simple… I’d rent the house out, just like an Airbnb. The property would pay for itself. And I would have access to one of the best surfing locations in the world.
Over the years that I held the property, lots of friends and acquaintances stayed there…
They were having a blast. And the once-secret surf spots were becoming popular destinations. My roadmap was playing out just as I thought it would. But there was one problem…
Not a single penny of that rent money ever made it back to me.
I had someone taking care of it locally. And by the time they got paid, plus cleanings and upkeep and fees, I never made a dime.
My house was the surf destination. But somehow, I wasn’t making any money on it…
To this day, I don’t know exactly where the hole in the bucket was. Folks paid to be there. But between the fees, maintenance, cleaning, and who knows what else, none of it ended up in my pocket.
After a few years, I sold the house for about 3 times what it had cost me. It was a major win, even after the rent issues.
More than that, it was a big learning experience. I learned that managing property thousands of miles away comes with unique challenges. Fortunately, I also learned a lot more than just that.
In the years since, I’ve continued to seek out real estate opportunities. And most of them ended up being darn successful.
More important, each venture came with its own learning experiences. And each opportunity presented itself in different ways. The thrill and chase of a real estate deal, aside from being profitable, can also be a lot of fun.
Today, the majority of my investable wealth is in real estate. I own plenty of stocks, too. But I tend to gravitate toward property first.
To say that I’ve learned a lot would be an understatement. So we’ll start with the biggest takeaway from my personal investments…
When it comes to real estate, no matter what you’re looking at, there are only three things you need to understand. And no, they aren’t “Location, Location, Location!”
Once you understand these three simple principles, you can apply them to any real estate investment… from homes to raw land to apartments. It always works.
So, let’s get started by looking at my first rule…
Investment Rule No. 1: Don’t Pay Too Much
The first rule of successful real estate investing is: Don’t pay too much.
This may seem obvious… so obvious that you’re wondering why I bring it up at all. But believe me, overpaying is a trap that’s easy – and I mean EASY – to fall into.
The problem is emotion. Folks get emotional about their stock investments, after all. And real estate is much more tangible. You see it with your eyes and touch it with your hands. Emotions can run wild and trick you into making bad decisions.
Without realizing it, you can fall in love with a particular property. That leads to a willingness to pay any price. And overpaying is the easiest way to get into trouble.
If you’re not buying for investment purposes, it’s a different story. Your home, in my opinion, is more about living than it is about making an investment. Buy the home you actually want to spend time in. That’s fine… But investment real estate is different.
You’ve got to seek out deals. Getting at least a 10% discount to true market value is key. And that’s AFTER estimated closing and renovation costs.
To get a grip on true market value, you need to look at similar sales in the area. For a home, figure out the typical sale price based on price per square foot.
Not every home is identical, of course. Remodels and amenities can alter numbers. But if you look at 20 or 30 recent sales, a trend will emerge. Make sure you’re buying at a discount to that price.
I’ve had a lot of success buying homes this way. I’ve been fortunate enough to buy at discounts of about 20% to the market.
That sounds good on the surface. Buy stuff cheap, and the rest works out. But I know what you’re wondering… How did I actually do it? How do you get from cheap prices on paper… to successful deals in reality?
These were the keys for me:
- I was willing to walk away from the deal (it didn’t HAVE to be THAT house).
- The houses I bought showed terribly, but they were fine structurally.
- The sellers lived out of state and didn’t have a strong emotional attachment.
Ultimately, the point is don’t ever overpay. There are plenty of other properties to choose from. So be willing to consider properties that look ugly… but that you can easily shine up.
This is exactly how my wife and I bought our first home. More on that tomorrow…
P.S. To hear more about my experience with real estate… and how you, too, can invest OUTSIDE the stock market to build real, significant wealth – whether flipping homes, buying tax certificates that can pay double-digit yields, or even owning raw timberland – click here to reserve your seat for my special broadcast next week.
Now here are some of the stories we’re reading…
Total U.S. debt surges to $55.9 trillion amid big increases in corporate and government borrowing
At the same time, plunging stock market values took a bite out of net worth, which fell $7.4 trillion to $110.8 trillion. Wall Street, however, staged a sharp recovery off its March lows, so much of that loss likely has been made up. Equity values fell by $7.8 trillion, while real estate value increased by $400 billion in the first quarter.
The Early Coronavirus Warning That Woke Up Wall Street
The warning was stark. It was late January, and there were just six known cases of COVID-19 in the U.S. A leading infectious disease specialist who previously had battled Ebola and SARS had an alarming message for a group of money managers: It was about to get a lot worse.
Risk of new lockdowns rises with fear of second COVID-19 wave
Health officials worldwide have expressed concerns in recent days that some countries grappling with the devastating economic impact of lockdowns may lift restrictions too swiftly, and that the coronavirus could spread during mass anti-racism protests.
Seattle’s ‘Autonomous Zone’ and the Paris Commune of 1871 Are Ominously Similar
In the end, it all came crashing down. The Paris Commune, when it finally came under direct assault by the Versailles government, disintegrated into a bloody heap. Those who lived by the sword ended up dying by it. Thousands were killed in its final days.
And let us know what you’re reading at [email protected].
Publisher, American Consequences
With P.J. O’Rourke and the Editorial Staff
June 15, 2020