I use a particular quote frequently when I give presentations on tax-deferred exchanges and the benefits of investment real estate. A reader of these posts emailed me over the past weekend, asking me to explain something I posted in another online forum. Here is the statement they were curious about:
"People are perfectly willing to help you pay your bills . . . if you let them."
First let me say I did not originate this quote. But it helps people understand how real estate pays for itself, in a manner of speaking. I first heard the phrase when I met Furman Tinon of Newark, Ohio. Furman is a nationally known expert on investment real estate. Furman and I belong to Columbus Real Estate Exchangors (CREE), an organization of Realtors who specialize in helping clients increase their holdings while avoiding capital gains taxes utilizing IRS 1031 tax-deferred exchanges. We meet weekly to inform each other of properties we have for sale, or are looking for, on behalf of our clients. We also brain-storm to help each other find solutions for the challenges our clients face. CREE is part of a larger statewide organization called OCREA, Ohio Commercial Real Estate Exchange Association. OCREA just finished up a 3-day marketing session in Columbus that attracted more than 65 agents and brokers from a six-state region, all sharing details on investment properties they either have listed for sale, or are seeking for their clients.
Anyway, Furman shared this one-line philosophy with me. And it stuck. It has gone far to help me teach people the power of real estate. It's simple really when you think about it. You purchase a property, starting with a down payment from your personal funds -- though they may not need be from your checking account, but may be proceeds from a stock sale or other liquidation of an investment that is not performing well. After you're into the deal, your residents (I try not to call renters "tenants") pay your bills for you. THEY pay the mortgage each month. THEY pay the upkeep and maintenance. THEY pay the insurance on the property. Get it?
They'll do this . . . but you have to let them.