I had my “offer sheet” ready and found, what I thought, was my first property. A single family house in Sayreville, New Jersey was my target property. I tried to engage a local real estate agent for him to submit an offer to the seller. He looked at me and explained, “You are not going to motivate any Seller to take back a mortgage”.
“This, especially when you haven’t put down a deposit on the subject property!” “Secondly, no real estate agent will stick his or her neck out to have you embarrass that agency with an offer such as this one!”
After trying, at least, to have an offer submitted and having failed in that effort, I then decided that it was time to try something else. I was taught to “train” a real estate agent or broker as to the advantages to the Seller of a “Take-Back Mortgage”. I could find there was no agent or broker who would be motivated …. I discovered the only way I could even approach a Seller directly was to become an “agent”, myself.
So, I found an ad in the local newspaper under, “Positions”, this one said, “Real Estate Agents wanted! We will train at our expense!”.
That’s when I decided that this unique approach needed an ‘inside strategy’. I visited a tiny office just off a major county highway where, “Red Carpet Realty” was located. It was a tiny building which was, “shared” by a Check Cashing store. That is where I met “Uncle Neal” an experienced broker in a specialized business where, “Knowledge and Experience was KING”! Mr. Neal Silberberg, the broker, was a very knowledgeable Real Estate Broker who sold foreclosed homes throughout the entire state of New Jersey. From Vineland in the South to Dumont, in the North, Red Carpet was KING!
Neal owned and operated one of the only agencies in the entire state where these listings were “open” and available to all licensed agencies throughout the state. The problem for most competitors was the rules and regulations were not always clear and understandable to anyone outside this specialized business. Neal’s contact persons at these government offices, knew his name and knew that he was an experienced Broker who had been the most successful and chances were that he would make no mistakes.
Of course, foreclosures were a subject, with which, I was very familiar. I had learned about these “unique investments” which were taught in the Seminar which I attended in Philadelphia, only a few months earlier.
Neal sent me to a real estate class which took place in the local area, specifically, Edison, New Jersey. The teacher was a gentleman who was also the Head of the local Veterans Administration who was in charge of those boarded-up properties.
He was the one person who, all agents wanted to speak with, in connection with any and all VA-owned properties, which my prospective investors wanted to bid upon.
During my first year, as an agent, my investor-clients’ bids won 13 properties! I calculated that they netted about $250,000.00 after fix-up, during that one-year period, while I earned a gross amount of $18,000.00 in commissions, minus expenses!
It was easy for me to realize that I was on the wrong side of this equation. But while I worked with and for Uncle Neal, my reputation was getting around. Neal had spread the word throughout his agency that “Gary Knight” was also seeking, Pre-foreclosures and, sure enough, after a few weeks, an agent asked him if she could speak with me.
She owned her own home which was located on an Atlantic County highway called, the “White Horse Pike”. She was behind on her mortgage payments and needed someone to help her out of her present situation. She had an existing F.H.A. mortgage which at the time was “assumable” at an amazingly low, 12% rate. At this time, mortgages were unavailable through a bank or mortgage company and the prime rate was 20%! It was 1982, when gas lines stretched “around the block”, making life difficult as the economy deepened into a major recession which started only two years earlier.
This particular time, I discovered, was the “perfect time” to invest in real estate. When nobody was willing to pay cash, if a seller didn’t offer to “take back a mortgage” that seller would be stuck! Of course, in real estate investing as well as most other investments, “Timing is EVERYTHING”!
The seller, through Neal, called the F.H.A. and found that her mortgage payments were behind by about $1,500.00.
I offered to ‘take the mortgage “SUBJECT TO” the existing loan” (not assume it, but “subject to” (this simply means that the “Bond” sticks to whomever originally signed for it…. in this case, it was the “Mortgagee” who was the original purchaser!
I paid the Seller, $1,500.00 to move herself and her family out of the 3 bedroom, 1 1/2 bath home and she agreed that it would be vacant at the time of the closing. That was verified with a “walk-through” as a last-minute check.
That modest, single family home became my very first purchase of an investment house! My career was now in ‘Start Mode”.
Uncle Neal was proud of my achievement and it was at that time, in concluding this successful transaction which convinced him that he should start to secure his own retirement by purchasing single family houses, and as soon as possible. The rest is history. He did so by investing in a single-family home nearby his office and then one somewhat further away and finally, he ventured into Atlantic City, a place where the Hotel Casino Business was “exploding”.
To this day, Neal still owns that same house in AC and was lucky enough to have casino dealers occupy his house. Since the Coronavirus catastrophe, this investment is still occupied by these dealers .. and the rent is still being paid on time and in full.
The next phase of my Real Estate Investing career went from a starting position to “EXPERT” AS A REAL ESTATE CONSULTANT!
Next Segment is : My Real Estate Beginnings (PART FIVE)