Psalm 62:10: “Though riches increase, do not set your heart on them.”
The real estate boom early in the new millennium created many wealthy REALTORS® and lenders. The owners of huge brokerage companies started thinking they were geniuses! Huge homes, second homes, vacations, and cars were on everyone’s lists.
When the bubble burst, real estate prices along with many other asset classes plummeted. Many investors and real estate companies declared bankruptcy; many owners found themselves upside down. I had personally been through two other “big bursts” in my 40-year real estate career.
In 1997, I knew there had to be a better way, and I started being pulled by the Holy Spirit to know Jesus better. Some people talk about a flash of light, an immediate understanding, or a time when the Spirit rocked them so hard there was immediate clarity.
For me, it was the presented paths and a gentle push to take the right one. It was the presented opportunities, the people put into my path, and the people sent packing. It was so clear that God was influencing my life, and I found myself having a constant conversation with God to show me the way He wanted it done. Looking back, it is so clear that I have been led.
For you who knew me as a world class sinner, I still am a sinner! But with God’s grace, I am daily striving to live a life for His glory. I’m not winning less at what I’m doing, but I’m certainly winning for a different reason.
Verses 11 and 12 of Psalm 62 provide the way for you to move forward. God has all the power and has unfailing love. God is a refuge for us and He cares for us. He is the only One in whom we can put our trust. I want to provide a God-glorifying dividend in everything I do!
Sure, I still want to increase my riches, but now, it is for who and what I can help. In fact, instead of material dreams, I dream about making a difference. This change has affected my real estate investing, and I have seen it affect my wife’s real estate brokerage as well.
For me, flipping for profit is dead. Buying low and selling high with some en vogue grey paint in between is not a game that I want to play. It involves the maximum IRS involvement plus the costs of the sale, repair, and taxes cut into your estate. It’s now keep and build equity with equity paydowns, change a tenant’s life with the best rental at the best rate, and pay off the mortgage waiting for the time when I can move the equity to an entity better positioned to serve God.
The concept is simple, and this financial environment supports it.
1. Find property that is lower maintenance and in good school districts.
2. Offer prices where, with your down payment, there is enough rental income to pay off a fixed, fully amortized loan. Use at least a 40% of gross income expense factor as your cost of operation on everything, except principal and interest payments.
3. Shelter your income with depreciation expenses on fixed-loan properties and inflation will push up your rental income. Take any positive cash flow and apply to the underlying loan for faster amortization. Get your first free and clear property. Use the income from that to pay down your other highest rate mortgages. Continue working your real estate job.
4. Provide a home for your tenants that blows them away! Improve the property substantially at every turnover. Treat your tenants as family. Respond quickly and effectively. Charge a fair rent and give deserving people the chance they need to change their lives.
5. Have lots of free and clear properties that you can give or will to your church. Use the income to fund missions you believe in.
When this became my business plan, the bubble pop did not affect me. There was no negative cash flow. God led me to a path that included Kankakee, Illinois (high income to price ratio real estate). Add in my knowledgeable and supportive wife and a church that made the Bible relevant to make the equation more complete. Therefore, riches increase and my heart is set on how they will work into God’s plan.
Now, I know some of you hard-boiled movers and shakers think that I have been overcome in drinking the “Kool-Aid.” The path that has led me to navigate this crazy real estate market, find peace, and have purpose are just too obvious to not be orchestrated by God. Therefore, consider the good you can do as your riches increase. Riches are not promised by God, but it will be exciting to wake up each morning and see the path laid before you!
Walter Sanford has been designing and implementing real estate systems for 30 years. One of the most successful REALTORS® and now wealthy from his systems, Sanford teaches his systems and strategies through his products, seminars, and personal coaching producing the best results in the industry. Do what works, do what is proven. Hire Walter Sanford. Call our office at 800.792.5837, email walter@waltersanford.com, or chat with us online at www.waltersanford.com.
