Imagine buying 52 homes in 52 weeks – that’s purchasing real estate every week. Sounds impossible, doesn’t it? But for real estate investors Gene Burns and Dr. Dolf de Roos, the impossible wasn’t a statement; it was a dare. They took that challenge to Las Vegas and proved the impossible wrong.
When the dot-com bubble burst in 1999, Gene Burns found himself broke and disillusioned. He had taken a chance on a dot-com company in the late 90’s in the hope that if the company went public, he’d strike it rich and get the sprawling large mansion home that he had always wanted. Instead, the stint signaled the end of his love affair with corporate America…but not the end of his long-time fascination with large homes. Undeterred, Gene sought a fresh challenge and found direction in the phenomenal bestseller “Rich Dad, Poor Dad” by Robert Kiyosaki. He also attended many of the seminars and boot camps held by the Rich Dad advisors. But the turning point in his real estate career was when he attended a Learning Annex real estate class in 2001, taught by Dolf de Roos, who proposed the challenge of buying 52 homes in 52 weeks. Dolf de Roos wanted to demonstrate that anyone could buy real estate if they learned the market and took action. Gene convinced the guru to take him on as a partner, they teamed up and they targeted Las Vegas.
This celebrated real estate investor and author shall visit Cebu from October 13 to 16, 2007, for an exclusive talk with a select group of possible investors in Las Vegas and San Diego. In an exclusive online interview with The Freeman, celebrated real estate investor and author Gene Burns shares how the partners achieved their goal with smashing success (in fact, acquiring 52 homes in just 36 weeks and without ever investing more than $ 5,000 of their own cash in any house) and about what’s next for this real estate powerhouse:
Las Vegas is an unparalleled tourist spot. It’s fantastic! But as a resident in that city, what are the living conditions like? What attracts many people to live there?
It is so funny seeing the reaction when I tell someone that I actually live in Las Vegas, Nevada. I do not go to the Las Vegas Strip very often, only if friends are in town. Las Vegas has world-class restaurants and entertainment. I love all the shows and all types of music the city has to offer. Off the Strip, I live in a small golf course community that is very quiet and safe, and away from the Strip life. I do not drink or gamble and that is one way not to get trapped into the Vegas life style. The town is one of a transit nature and it is challenging to make good friends here. Many people move to Las Vegas, but just as many move out every day. Many people here have strong family values and a good sense of the community.
I think what attracts people to Las Vegas is the idea that you can make fast or easy money here. Neither is true. Most people work at the casinos and Vegas used to be a great place to find affordable housing, but the housing market became over-inflated and now has crashed. The town is now in an interesting transition: Las Vegas is the number one city in America with the most foreclosed homes. Many of the casino employees purchased homes they could not afford, hoping the prices would keep going up and now they cannot afford to pay the increasing monthly mortgage payments. It is a very sad time in Las Vegas. Bad for homeowners, but perfect for knowledgeable investors.
(Writer’s note: According to reports, Las Vegas has an explosive employment growth but with a housing supply limited by geographic constraints. In the frenzy of the heated real estate market, development companies made houses to satisfy the demand. The demand, however, was caused by speculators, not actual home owners. So when a point came that there were too many houses and that when the locals couldn’t buy them, the speculators panicked and started selling their properties. This was compounded by the fact that many people acquired houses that they couldn’t afford, so an influx of houses entered the market.)
What raced through your mind every week of the 52 weeks? What kept you going, kept you motivated every week to find a house?
Pure terror. I was so honored to work with the Rich Dad folks that I was not going to let anything hamper me from my success. I worked seven days a week 12 hours a day, to demonstrate my commitment to the project. When the USA had entered the first Gulf War, Dolf and I almost ended our quest. After much thought and after we restudied the market, decided to stay the course and finish the challenge. I was mostly left alone to do all the work finding and negotiating the homes and relied on coaching from the Rich Dad advisers and was financially supported by them, as well.
There were some weeks that I did not find any good deals and other weeks when I was forced to stop buying homes and start filling them with renters. It was an interesting balancing act. Once I found a system that worked, I duplicated it and adapted with the market
I was first finding distressed properties and controlling them with a Lease Option technique and then moved on to buying pre-foreclosures, and then homes with tax lien sales. One day, my niece came to me and told me she had purchased a home for $2,000 down in a new subdivision. I checked it out and was hooked. Once I went and bought my first Preconstruction or Spec home, that became the easiest way of the purchasing homes and that was how we bought our final 20 homes.
We had no idea that the market would take off as well as it did in 2002, but we knew that the value of the new and existing properties that we had acquired were really great since I had seen similar homes in California going for three times the cost of the homes we were acquiring in Vegas.
Do you believe the techniques offered in your book would work for real estate in other countries, such as in the Philippines? How so?
Yes, my system can work anywhere. You must know what type of market you are in (buyer or seller market). You must buy from a MOTIVATED Seller and you must conduct yourself in a professional manner and do DUE DILIGENCE on each property. You must set a plan, have an attainable goal, an entry and exit strategy. You MUST know how much money you have to work with and stay within your budget. DO NOT BUY homes HOPING THE VALUE will go up! Always buy 20 percent below the current market value and you will always do well.
What would you say are the key qualities to being an unstoppable real estate investor?
The key qualities in being a real estate investor are that you must have a passion for real estate and a passion for knowing everything about real estate! You must be able to control your emotions. Never buy on emotion. Always buy under the current market price. Always be able to walk away and never take anything personally. Plus remember if you are in a buyer’s market, the power is in your control.
You saw the Las Vegas bubble about to burst before it actually did. What practical advice would you give to new real estate investors in other parts of America and in other countries as to how they could track forthcoming opportunities such as that one?
The best advice I can give any real estate investor is: when everyone is leaving a real estate market (i.e. thousands of homes are for sale), that is a key indicator that you may be able to find good deals. All professional investors, in real estate or the stock market, buy when everyone is selling and selling when everyone is buying. I do love properties located in cities that most people want to go visit, like golf course communities or close to the ocean or a lake. Learn the markets you wish to invest in. Do not let people SELL you. Know the answers to question that you ask the realtors. Know the real value of the properties that interest you, and make sure you can make the investment make money.
When homes are staying on the market for more than six months, it is a buyer’s market. If they go fast in a month or so, it is a seller’s market. NEVER buy in a seller’s market; always make low offers in a seller’s market. Most importantly, BE PATIENT! All good things come to those who wait.
I’ve read that you chose Las Vegas because of its unique aspects and that your next stop is San Diego. Why is San Diego next? Are there other cities in the USA that share the same real estate opportunities that you saw in Las Vegas and San Diego?
My next stop is San Diego, for many reasons. Firstly, my family lives in Southern California and it is located on the Pacific Ocean, with the best weather in the United States. With all the market declines in housing, I believe I will be able to buy on or near the beach at a significantly lower price and then ride the appreciation up when the market re-corrects in the next five years. I think that any city that has a nice climate and is near the water or on a golf course or has some type of outdoor activities; those locations will always do well. St. George, Utah, is 90 minutes north of Las Vegas and is another town I am investing in. I choose San Diego and Las Vegas because of the climate and the draw both cities have on tourists.
What are your long-term plans in store for yourself?
My current and long-term plans are to work for others interested in real estate and to do the investing for them. Most people are working jobs and do not have the time to truly study market conditions, like I had the time and luxury to do. I do not enjoy the Tenant-Landlord relationship, but rather I love the ability to lend money to Professional Commercial Developers (secured by real estate), whose sole purpose is to build a project to make a large profit. When the developers run into financial short falls or just need fast cash to get them to the next round of financing, I lend them the money at extremely high interest rates, explaining if they default, I will get the land or project back from them and sell it at a huge profit.
When the developers pay me the high interest on the money I lent them, I do very well for my investors and me. If I have to get the land back, I also do very well for my investors and me. Of all the real estate investing that I have done (and I have done about everything), Bridge Financing or Mezzanine Financing (or Hard Money Lending) is the safest, best return on investment I have ever found. With the credit markets tighten up in the USA, money is harder to come by for real estate investing, so I am in a better position to charge higher interest rates and demand better collateral for the money that I lend the developers. To learn more about my company visit www.revinvestments.com.