THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Sunday, July 23, 1995 TAG: 9507200150
SECTION: CAROLINA COAST PAGE: 46 EDITION: FINAL
SOURCE: Chris Kidder
LENGTH: Medium: 92 lines
Last year a reader called to ask me about a ``no down payment'' real estate investment program she'd seen advertised on television. She was desperate for money and a career; the real estate program seemed to promise both. Fast.
This real estate tycoon wannabe called the infomercial's toll-free number and within days received her special, limited time, half price offer. She was ready to write a check for $169.75.
In return, she was promised a step-by-step manual to purchasing and managing properties with no money down, a six-cassette audio tape library of the promoter's latest seminar, a portfolio of real estate forms and contracts, a ``Creative Options'' grid chart, two more audio cassettes, a workbook and a guide to ``creative'' tax strategies.
Two bonus videos would provide personal guidance from the promoter, ``a $500 value,'' according to the sales literature.
It sounded good: Untold real estate wealth with no money down (not counting the cost of the program, of course), no special training beyond what could be learned from a couple videos, a few audio tapes and a workbook.
I spent weeks trying to track down satisfied - and, I hoped, newly rich - disciples of the ``no down payment'' program and a company spokesman willing to explain the ``money back guarantee'' to me.
I had no luck with either.
The reader, wanting to believe in miracle investments but lacking the faith, didn't write that check. I'm no gambler, but I'd bet she's $169.75 ahead.
H. Roger Neal, a real estate investor from Columbus, Ohio, has written a book, ``Streetwise Investing in Rental Housing: A Detailed Strategy for Financial Independence (Panoply Press, 237 pp., $15.95, paper).
On the surface, price seems to be the only difference between Neal's book and the televised real estate schemes: You start with nothing and end up a millionaire.
Like Carlton Sheets and a dozen other fast-talking real estate gurus before him, Neal says, hey, you can be rich like me. Unlike the others, Neal tells you upfront that you can do it without much money but not without hard work, careful planning and time.
When I talked with Neal one week after he arrived on the Outer Banks for his first visit, he had a plan.
``You're gonna love this,'' he tells me. ``I've found a way to make some money.''
There's a gold mine on the Outer Banks, he says. Dozens of older, two- and three-bedroom houses are listed for $55,000 to $85,000 with owner financing.
The houses are no longer suitable for vacation rentals, but the beach needs affordable, year-round housing. ``How easy can it get?'' he asks.
He proceeds to tell me how it works, rattling off mortgage rates, five-year cost projections, rents and cash flows. In 10 minutes, he's laid out a plan for buying and improving eight to 10 year-round rental houses (he'll do much of the work himself) in an older beach neighborhood between the highways and he's raking in money hand over fist. But what seems easy to him sounds hard to me.
Neal, fortysomething and married with children, gave up a regular paycheck from the city of Columbus several years ago. He lives on income from his real estate holdings. He looks for cash flow and longevity with most of his investments.
``I want to buy properties that I'll want to keep,'' he says. ``I don't want to repeat myself.''
He does his homework. ``I know everything that's going to happen with a property before I buy it,'' he says. ``I have a plan and I follow it. I never feel that I'm taking any risk.''
Neal likes to pretend he doesn't have money. ``I focus 80 percent on the smallest and cheapest investments,'' he explains.
Even so, he admits the year-round rental houses are his second choice for an Outer Banks investment. He's got his eye on an oceanfront property that requires bigger bucks - $350,000 - and a willingness to wait 10 years for the $1 million payoff. ``You're gonna love this,'' he says.
Neal - and his book - has sound advice for investors. His strategies are based on his experience in an urban market and he recommends buying duplexes (properties in short supply on the Outer Banks) but most of his advice can be easily adapted to this market.
I sit with Neal at a local bookstore, talking about his book and listening to him talk customers out of buying it. ``After reading my book, you'll realize there are no get-rich-quick schemes,'' he tells anyone who asks. Those who aren't put off by his candor and still want his advice are given a business card and told to keep in touch.
People aren't motivated to make real estate investment programs work, he says. ``I know there's nothing else for me to do. I have to do it or perish. Other people have other careers.''
``People want an easy buck; they want to know how to make money,'' Neal tells me. ``But there's always that one last step. Whether it's fear or that they don't want to be bothered, I don't know, but few will go out and do what it takes.'' by CNB