Real Estate Store

By Bruce Firestone | Uncategorized

Aug 23

I’ll tell you another story. A friend of mine, an elder, now in his late 80s, wanted to start a pharma distribution business back in the day. But like most (all) entrepreneurs, he had NO money. By definition, an entrepreneur has energy, luck, skill and ideas but very little money. If you ever run into someone who just did a VC-round of say $3 million to start a business, you’ve just met a big business person, one with no revenues.

Anyway, my friend had a plan; he went to ‘real estate stores’ (that’s what he calls them). He went to a number of brokerages and befriended agents. He asked them to show him their worst properties, the most neglected, the boggiest, wettest pieces of garbage land they had in their inventory (i.e., listed for sale). Now, you must agree, he is not a typical  realtor client?

Over the next few years, he bought more than 3,000 acres of land in and around his hometown (for as little as $150 per acre) getting as much as 90% STB (Seller Take Back) mortgages from owners (who were so keen to dump these unwanted properties that they would do almost anything to speed up the process/make it possible for someone with limited funds). Thus, he only had to come up with 10% downpayments most of which he borrowed from his brother, a well-to-do veterinarian and a war hero to boot.

Three years later, at age 32, he went into his bank and got himself a $500,000 LOC (Line of Credit).

“Got any collateral?” the bank manager asked him.

“Sure,” he said. “Lots! I’m a big shooter! I’m a ginormous landowner!”

He also told them he had an interim use—he’d leased out some of his lands to farmers and ranchers (true) and even owned some cattle and sheep himself.

Now the latter wasn’t entirely true* so when the bank manager asked to see some of his land and some of his herd, he was stumped but only for a minute or two. He subsequently trucked in a bunch of cattle and sheep (borrowed them). You have to laugh—ranchers traditionally don’t pasture sheep and cattle together, but the city slicker bank manager didn’t know that. He was impressed by the young man, his herd and his extensive landholdings so he approved the loan.

(* Please don’t do this. It’s OK to tell the smart truth but never a lie).

His pharma distribution business did exceptionally well and he sold it decades later and retired to the life of a country gentleman.

Now there is an epilogue to this story that is worth telling. Whatever happened to those “useless” 3,000 acres? The city expanded and they became worth millions more, some of which I subsequently sold for him. In fact the very first property I sold for him recouped his entire initial investment times 3. It was a 10-acre lot next to a wetland that, years ago, no one wanted because, in those days, wetlands were considered “swamps” whose only real purpose was to be drained or filled. Today, we understand that wetlands are the lungs of this planet and fantastic creators of biodiversity. Oh, and yes, desirable places to live next to.

@ profbruce


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About the Author

Bruce is an entrepreneur/real estate broker/developer/coach/urban guru/keynote speaker/Sens founder/novelist/columnist/peerless husband/dad.