My best friend Bing and I spent the next two years commuting to college thirty some miles each way five days a week. That gave us a lot of time to solve all the worlds problems. Unfortunately no one listened to our solutions and as we aged we soon forgot most of them. One perceived problem, homes of our own was fortunately never forgotten.
All those drives let us work out our plans, we knew that houses could be purchased with little or no money, we didn't know how but we knew it could be done. We knew that if we bought a single family home we'd have to pay for it our selves. Both of us lived at home with our parents, for free. We knew we wanted places of our own for no other reason than we wanted them! We also knew that we were paying almost all we could afford.
Our solutions were different, but similar and compatibles Bings' suggested "room mates," "boarders" we knew all these college students looking for a place to live, he'd find a large house and rent out the extra bedrooms.
I am the oldest of five, and I couldn't face the idea of "room mates," I couldn't do it then and I couldn't do it now 42 years latter. Bing was nearly 20 years younger than his sister and didn't have my hang-ups about personal space. My solution was a duplex or large multiple family home.
All our planing was hypithcal anyway since we were "underage."
Not only were we "underage" we were facing the draft. Two years of planning found Bing transferring to Western Michigan University, I was transferring to a school in Angola. Un-fortunately /fortunately, (?) I was going to be out of school 6 days to long! I enlisted in the USMC, if I had to fight I wanted surrounded with Marines. I turned 21 on Camp Pendleton. Two days latter Bing turned 21 back home. While I was taking "pre-Nam" training Bing was buying his first duplex one block off the old campus at WMU.
Bings' solution, a duplex with 3 bedrooms in the lower apartment and 2 in the upper. He rented out the upper unit as an apartment, then took in room mates in the lower unit, two in the master suite and one in the small bedroom. His cost, he paid the phone bill, less than one days gas when we were comminuting (we were paying $0.299/ gallon.) He'd done it! Little or no money out of pocket! Monthly cost less than living at home! A place of his own!
Two years latter Bing leveraged his equity in the duplex and bought another duplex with a large guest house in back. He rented out both units in the first house, the guest house, and two of the three bedrooms in the large unit. Bings' home now paid him! The rest of the story is completed in my book "One House At A Time / Finding And Buying Single Family Rentals."
I didn't get my first home, a duplex, for another a year and a half, that story is also in the book.
Now kids are legally adults at 18 (since '71), but still they have to take time learning about real estate on their own, and many never will. That's disgraceful! It's to be excepted, but disgraceful! Not everyone is collage bound (we'll get back to this) and many learned home maintenance at their parents side. Many kids are much more capable of taking care of a house that we are, personally, I haven't been on a ladder since early 1984 and it's not likely I'll ever be able to.
Almost all wealth in this country is made or accumulate in real estate. The most effective way to get rich is to buy real estate young and often! Your chances are better at becoming an NBA star than getting rich without buying real estate! Even if you're a bursty 4' 11' inch woman who hasn't been able to see your own feet since you were 13! But, we don't teach kids to earn a living, build security, or accumulate wealth in high school, or college.
It's no wonder we don't teach real estate in high schools, the teachers themselves don't know anything more that it's the ground that we walk on. In Las Vegas the teachers union and school administration claim teachers can't buy homes! They're right of course. Their logic is wrong, but they're right. They claim they can't buy homes because they don't make enough,
The thing is not their lack of income, for they make more than most people in our area the household income of a couple of working teachers at the starting level is 1.5 times the median house hold income for Las Vegas!
The reasons people can't buy real estate are;
1. They don't understand real estate.
2. They don't know how to buy and neither do most of their advisors.
3. They don't want what they can afford!
The hardest problem to deal with is #3. It has always amazed me that when working with young adults, most of them can only remember their parents home where they lived during high school. It's rare that anyone can remember their parents first small home, yet it's those "starter homes" that allowed their parents to buy the big house 10 or 12 years latter. They want what their parents have now after 20 or more years of hard work.
If we don't teach our kids how we got "ours" how can we ever except them to get "theirs?" Some would say starting with a lesser house is lowering exceptions, I say demanding to start at the top is lowering potential!
Problems 1. And 2. We have to teach the magic of real estate. We need to teach our young adults:
1. How to buy real estate, with and with out money and credit.
2. Amortization. (The first 20% of real estate magic.)
3. Appreciation. (30% of real estate magic.)
4. Leveraging. (The biggest magic in read estate.)
5. Pyramiding! (Multiplying the magic.)
6. Financing.
7. Renting, simply that all of us pay for the space we occupy.
8. Taxation.
9. Human empathy.
10. Practical bargaining.
11. Contract law.
12. Self reliance.
13. Self motivation.
My solutions are simple, take two weeks in a senior civics class and teach these young adults how to buy real estate! Everyone should read a book like my "Get The Money /A Consumers Guide To A Successful Mortgage Application" or something similar. The more ambiguous students should spend a week studying with my "Flipping For Fun And Profit" or possibly Janette Fishers' "Dog House To Doll House"
School Teachers, and the truly poor among us should study "One House" "Get The Money" and "Flipping" because people without a working knowledge of real estate will always be stuck in a lower economic class.
I said I'd get back to the college thing. In May my wife and I had the great honor of going to Ohio to watch our daughter get her "Doctorate with Highest Distinction" at ONU. Having dinner the night before graduation we met many of her friends, one young lady mentioned that Monday morning before she could leave town she had to close the sale on the large house she bought when she came to the school three years earlier. Her only problem was deciding weather to buy another house with cash or pay off her student loans. I was pleased to meet her only 3% of the people int our country ever get a Doctorate and like our daughter she was finishing with Highest Distinction, which meant she was among the top 3% of the top 3%, the best of the best. I had written about buying a house while going to school, it's repeated it in "One House" so it was hart warming to hear what this outstanding young woman had done.
Two weeks, 10 classes, less than 10 hours, near the end of their senior year could do more to insure financial success than anything our kids were taught in school so far!