INTRODUCTION/MY STORY

Hello folks!  How many of you have ever seen someone advertising a product or service on the internet and you have no idea who they are or how they are allowed to offer these products or services?  Yeah, Same here.  So….  who am I and how am I qualified to be providing the products and services I’m offering? 

My name is Tim Chaffin.  I was born and raised in a small rural town near Pittsburgh, Pennsylvania called, “Hookstown”.  My parents were born and raised in Kentucky and moved to Pennsylvania in the 1950’s so my father could work in the area steel mills.  I had 3 older sisters and one older  brother, so I’m the youngest of 5.  We grew up poor, living in a 2 bedroom, 1 outhouse, 400 square foot house that my dad actually build.  We didn’t have an inside toilet until I was in grade school.  My father was a veteran in WW2 and had talked about being a minister before I was born.  We always went to church every Wednesday and twice on Sunday and the days we didn’t go to church he would read the bible to us every night for an hour or more.   My parents were rather thrifty.  We had our own garden.  We cut trees for firewood in the winter.  We had chores.  They taught me how to save, to be frugal and not waste anything.  My dad always told us to be kind to others and obey mom and dad.  If we didn’t, he would take his belt off or go outside and get a, ‘Switch’, a small thin tree branch he would use to ‘discipline’ us with.  I think from the moment he went outside and waiting for him to come back in knowing what was in store was torture enough.  This type of behavior is learned and something that today’s society no longer tolerates as a method for discipline however this is one of the things that have made me the person I am today.  Later in life, My father mellowed out and changed his ways before passing away at 95 years old.  My mom was the typical wise, loving mother that everyone went to when they had a problem.  She was also very outspoken and direct in telling you what she thought. So my childhood was fairly ‘normal’ for my generation.  I was always sick as a kid, having asthma and just about every allergy out there.  I remember going to the doctor to get tested for allergies.  They used to prick your arm, exposing you to different potential allergens, and my entire arm swelled up indicating that I was allergic to all of them.  I missed a lot of school so I missed out on a lot of the social aspect of elementary school but grew out of most of the allergies I had by the time I got into middle school. As I got older and involved in sports in high school, I ran track, setting a few school records, worked out with weights and became more muscular, etc. By this time most of my allergies had cleared up.

I ‘sort of’ started my first ‘business’ when I was 11 or 12 years old selling tablets and flavored chewing gum to my classmates.  Every student got a pad of paper and a number 2 pencil the first day of school.  Some students just threw their tablet away or left them lying around in classrooms.  That’s where I came in, saving all the tablets that other students would give me or throw away.  Then later, when they needed some paper, guess who has it?  I would sell the tablets for 25 cents. I got an allowance and used that to buy candy cigarettes, smoothie cups and flavored chewing gum at, “Wright’s” five and dime store by the post office.  The gum was selling for 5 cents a pack of 7 sticks and I had 50 cents for my allowance so I got 8 packs of gum.  Chocolate, strawberry, Beehmans, (that was like a licorice flavor gum popular in the 70’s) vanilla, blueberry, etc.  I went to school with my pockets full of 2-3 flavors or gum since I couldn’t decide which one was my favorite.  I was sitting in math class and everyone was asking me what type of gum I had and wanted a piece.  Thinking to myself, “I don’t want to give away all my gum that I spent all of my hard earned allowance money on”, so I told them I could ‘sell’ them a piece.  “How much?”  5 cents each.   I sold every stick I had on me and now had 2 pockets full of nickels dimes and quarters.  The next day I brought the rest of the gum and sold all of it that the same day.  Doing the math you can see I made all my allowance back each time I sold a pack and a half of gum.  I convinced mom to take me back to the store so I could buy more gum. When I told her what I had done with the gum she just laughed.  The next school day I came in with some other flavors and sold a few however now, one of my classmates, I’ll call, ‘Tracy Smith’, had also gone to the same store and was now selling the same gum for 4 cents a stick.  When the teacher found out what we were doing she banned gum in the class and we were both out of business. 

I had some odd jobs, the most memorable one was working at a local skating rink, “Melody Lanes” which was right across the street from where I lived.  Parents gave me an allowance for doing my, ‘weekly Chores’ so I was able to save up my money.  My dad would match whatever amount I would put in the bank instead of spending it.  If I put $5 in the bank, my dad gave me another $5 to match but I couldn’t take it out and spend it. 

I started my first ‘real’ business when I was 17 years old.  My best friend through high school, “Matthew” and I started a mobile DJ business.  We loved music and went to all the dances however the DJ’s weren’t up on the latest music.  I recall one dance where one of the DJ’s speaker blew out so the next dance he only brought one speaker.  His lighting system consisted of one ‘strobe’ light.  I remember one dance when someone that had epilepsy went into a seizure and fell on the floor. We assumed it was caused by the strobe light.  So, I purchased sound equipment, got a loan from the bank where I had my savings account to buy a lighting controller and built my own DJ set up.  I didn’t have a way to haul it to the gig location so Matthew used his parents truck, which was actually an old ambulance that was converted to an enclosed truck.  They weren’t called SUV’s yet. Anyways, it worked.  Our first gig was a fund raiser for the drill team. My girlfriend, Lori had hired us.  It was a success and we did a few other local dances and then started at a local nightclub, ‘2001 West’, in Chester, West Virginia.  My parents weren’t crazy about me working there since it was an adult nightclub where they sell alcohol and there are fights where the police are called routinely, etc. A year or so into the business Matthew became deaf in one ear and had to bow out of the DJ business.  From that point on I was on my own.  After working at the club for a few months one of the bartenders asked if I could DJ for her wedding reception.  I agreed and ended up booking a few other weddings during her reception.  Later I found out that most DJ’s get more money for weddings than for clubs so my rates increased over time. 

My friend Matthew and I went to a local video tape rental store, “Thompson Video” in Beaver, PA to rent, “star wars”.  They had several video camera’s on display with one of them connected for everyone to see themselves on the big screen TV monitor. The salesman could see I was interested and showed me all of the new video camera’s they were selling.  Of course I ended up buying one. Several ideas went through my head regarding what I could do with this new toy.  The main idea I got was to videotape weddings along with the DJ services.  This worked out great since I was one of the first to do this.  As time went on I added other services including Karaoke, music videos, video production services, etc. I did sales training videos, demo tapes for local businesses, private events, etc. 

College was Penn State, obtaining degrees in computer science and business.  At that time everyone was going to college for computers so by the time I graduated you needed to have ‘experience’ along with your degree or you couldn’t get hired in that field.  My brother, ‘Tom’, was about 11 years older than me.  At 6 years old, I was the ‘ring bearer’ in his wedding.  He barely graduated from high school and started worked at the steel mill in Weirton, West Virginia.  During my first year of college he approached me saying he had a business opportunity he wanted me to take a look at.  We met at his house and I listened to another gentleman go over the “Amway” presentation.  Amway was the first, “Multi Level Marketing” company, ever.  I was going to sign up that day and Tom told me I couldn’t yet (because he hadn’t signed up yet.  He was using me as a guinea pig).  I had to wait for him to sigh up so I could sign up under him or what they called, ‘sponsor’.  After 6 months of going to ‘rally’s and seminars’ on the weekends when I didn’t have DJ gig booked, I decided to start doing something with my Amway business.  The next 6 months I took that business to $100k year business, doing what they called, going to the “Direct” level.  This is the first benchmark notable in their tiers of success.  In the next 2 months, everyone I ‘sponsored’ had quit.  I was back to the drawing board and come to realize that while this was a great learning experience, it wasn’t a business for me long term.  What I enjoyed about this program and gained from the most was what they taught me a lot about mind set, networking, self improvement and goal setting.  I was introduced to many motivational speakers like Zig Ziglar, Jim Rohn, Brian Tracy, Dr Wayne Dyer and many others that inspired me even more in being an entrepreneur.    

I graduated from college in 1982.  Computer programming wasn’t my thing so I decided to go back another year to get my degree in business since I had more of an entrepreneur mindset than wanting to work for someone else.  While I was in college I worked out at a local Gold’s Gym.  During my final year of college as I pulled into the parking lot to workout at Gold’s, I noticed the windows were all covered with newspaper. I thought maybe they were painting or remodeling or something. I came to find out they had gone out of business.  In the 1980’s the steel mills were closing and many local businesses were affected by it.  A friend of mine was working out at another gym in East Liverpool, Ohio, not too far from where I lived in Hookstown.  I didn’t realize how close it was until he showed me how to get there.  It just happened that the owner was looking to sell the gym.  I ended up negotiating the price down for the business which was, basically, owning just the equipment and purchased it in 1984.  The building where the gym was located was owned by, ‘Bank One’. The property was originally built by a local company that built boats and had gone out of business, thus the bank foreclosed on the property and was now the owner. The people I purchased the gym equipment from only had a month to month lease so there was no guarantee that I would be able to stay if someone purchased the property.  At this time, Lori and I were engaged to be married. We had been reluctant to set a date since my work was limited to weekends, working at night clubs and wedding receptions.  Plus, that income wasn’t sufficient to support a family (I had put it off as long as I could, lol). Well, now we have our own business, we can get married! So, yes, I married my high school sweetheart.  We started looking for a place to live and since I was an entrepreneur, I wasn’t interested in renting. 

Spring of 1985, Lori and I met a few real estate agents, finding most of them from driving by a house and seeing their ‘for sale’ signs or from one of the local, “Homes” magazines that were advertising homes for sale.  Jean Diddle from “Jean’s Realty’ was the first one we talked to.  She showed us a few houses and then never called us back.  We looked at a few more houses with Dick Bryer with “Bryer Realty”.  He never called us back.  We finally looked at a property with yet another agent with no reply.  I called Jean back to show us another house and she said she wasn’t sure that were even able to buy an house.  When I asked why she explained that I was self employed, which means I wouldn’t qualify for conventional financing.  I didn’t earn enough income from the DJ business to qualify for the lenders, ‘debt to income’ ratios.  I had no business tax returns for the gym business since I just purchased the gym.  And, I had no money for a down payment since I had just spent most all of my savings on buying the gym.  What are we supposed to do? 

A few weeks later we are at a family ‘get-together’ and I’m talking to my oldest sister Aggie’s husband, “Neal”.  He asked me if we were planning on buying a house or renting after we are married.  I replied we really wanted to buy but couldn’t.  He asked me what I was talking about and I explained what the real estate agent had told me.  His immediate reply was, “Those real estate agents don’t know anything about real estate.”  ( I still laugh at that one)  What he was trying to say is they don’t know anything about real estate investing.  Neal and my sister Aggie had been investing in real estate since the 70’s without using any of their own money.  We had a conversation about some of the deals they had done using, ‘other people’s money’ and ‘creative financing’. Since this was all new to me it sounded like some of things they were doing were illegal.  Over time, as I learned more about financing I found that some of things there were doing actually WERE illegal.  (I’m laughing again. Don’t worry. The things I’m going to share with you are not illegal but it’s always best to check with an attorney in that state to be sure) The way they did things were new to them at the time.  Hey, you have to start somewhere. 

A few weeks later, Neal and I went to a couple free seminars in the Pittsburgh area featuring Dr Al Lowrey, Robert Allen and Dave Deldotto, to name a few.  My favorite book that changed my thinking was the book by Robert Allen titled, “Nothing Down”.  I remember seeing his infomercial on TV where he was saying that you could drop him into any city in the U.S. and within 3 days he would have a property under contract to buy with none of his own money and he could show ME how to do it too.  Great ad.  We went to the free seminar and I ended up purchasing his best-selling book, “Nothing Down”.  In Roberts book he talks about how the key to buying real estate using none of your own money is finding a motivated seller.  Someone who’s motivated to sell is normally going to be more open to doing something creative to get them out of their situation.  He added that most people are not motivated.  Since we are not able to talk to people that list their property with a real estate agent we are less likely to be able to determine if they’re motivated.  (and most agents don’t understand how they get paid if the buyer doesn’t have any money in the deal) The majority of the motivated sellers are ‘off market’ properties.  Robert went on to say that you may have to talk to 3-4 times as many people to find a motivated seller so it will take some time.  He said if you start off having a goal of buying one property each year for 5 years, in 5 years the first property you purchased should have enough equity in it for you to now go to a bank and borrow that equity.  You then use that money to buy house number 6.  In year 7 you borrow the equity in house number 2 to buy house number 7 and so forth.  In 10 years you own 10 houses that you have none of your own money in.  The tenants rent is paying down your mortgage, the values are going up over time, you have income on the properties (cash flow) and you have the tax benefits so that you pay less taxes.  Long term, ‘Buy and hold’ real estate is by far the best real estate investment strategy of them all.  Now I’m thinking, “One a year?  I could do that”. 

Lori and I started looking at properties that were “For Sale by Owner”, bank owned properties and properties coming up at auctions, etc. where the seller will likely be more motivated.  Over a period of 3 months we looked at more than 50 properties and nobody was giving us their house.  Now we’re thinking of framing in a room in the back of the gym to have for a bedroom since our wedding was now only a couple months away.  Then, one day, we got a call from one of the FSBO’s we looked at.  The lady’s name was Gennesta McPhearson.  (yes, she was old)  She asked if we were interested in buying her house.  I replied that I was interested in buying her property however I had no money for a down payment and couldn’t qualify for a loan with a bank at the moment so the only way we could buy it would be if she could do owner financing.  She said, “how does that work?”.  I hesitated for a moment, feeling a bit exhausted with explaining it yet again, then said, “I don’t know….. I read a book that said you could do it……  but nobody seems to understand it when I explain it to them”.  She quiet for a minute then said, “well, you remind me of me and my husband when we were getting started… I want you to have my house.”  No one had ever said that before so I wasn’t quite sure how to respond so I quickly grabbed Roberts book to look up an answer for her. I finally just told her what I was thinking.  We don’t have any money for a down payment so we wouldn’t be able to give her anything up front.  She said, ‘Ok’.  We would need to make payments directly to her and we can only afford to pay…. $200 a month?  ‘Ok’, She says.  That $200 we pay every month would need to come off of the balance so that in 2 years the balance would be low enough that we could go to the bank and borrow enough to pay her off. So, she would only need to do it for 2 years.  Again she says, ‘Ok’.  Wow.  she agreed to every term!  My last comment was, “We need to fix it up before we move in and our wedding is in just a couple months. Can I have a few months without a payment so I can have money to fix it up?”  ‘Ok’.  I was floored….  Lori and I were high fiving as soon as we hung up the phone.  Not only did we not put any money down we got 0% interest rate on the loan from the seller AND 3 months with NO payment.  We went to a local attorney and he set up what’s called a “contract for deed”.  She had no mortgage on the property so this was like the owner was being the bank.  We moved in that same weekend.

Lori and I were married August 3, 1985.  We moved into the house a couple months before then and started going to the church just 2 doors down.  The gym business took off.  Memberships went 10 fold and I had a plan to buy the building they gym was in from Bank One.  As I was typing the offer up on my typewriter (remember this is 1985) this gentleman walks up the counter and asked to see the owner.  I asked how I could help him and he reached out his hand to shake mine saying, “Hi, I’m the new owner of the building and your rent is going up.”  He didn’t say those exact words but that’s all I heard.  Utilities were high and his plan was to insulate the building and increase the rent however much money is saved on my utilities so that all my monthly expenses would be the same as they are now.  The difference would be HIS gain, not mine however the rent would not go up, at least not right away. We had several conversations and this was the only way he would sign a lease with us.  Meanwhile, I has some members inquire about purchasing the gym so we agreed to sell the business and ended up profiting 3 times what I had in it.  We had just installed some tanning beds however the price we agreed to would not include the tanning beds so we had to take them out.  What are we going to do with 2 tanning beds?  We had no place to put them so we set one in our living room and one in our kitchen obviously taking up most of the rooms.  I connected them to electric so we could use them until we decided what we were going to do with them. One day, I got back from working out at the gym and Lori told me I had to come in the front door instead of the back door by the garage since her friends were using the tanning beds.  She had collected money from them to use the tanning beds. Hmm?  Maybe we should start a tanning salon?  We looked at several locations and with not knowing the business model we weren’t sure what we were getting into cost wise.  We then got the idea to put the tanning salon upstairs in our home since it was all open space. There were no ‘stand alone’ tanning salons.  Most of them were an add on to another business.  One was at a hair salon, one at a monogram shop and one at a vitamin store. There wasn’t much competition, however this was a fairly new industry.

About a month or so after we were married, we started going to the church just two doors down from our house. I recall the minister there saying one of the lifetime members of the church had passed away and left their house to the church.  Immediately after the service I approached him and asked him what they plan on doing with the house.  He said they were pretty sure they were going to sell it but hadn’t got the listing with the agent yet.  I told him I would be interested in buying it if they could do owner financing.  This would save them the cost of using an agent. He replied that he didn’t know anything about that stuff but I was welcome to attend their board of directors meeting on Wednesday to discuss it with the board members.  I went to the meeting and we ended up working out an agreement to purchase the property for $18,000 with the church accepting payments at 7% interest on the full amount for 10 years.  This would be a, “Land Contract”.  There’s no mortgage on the property and the agreement states I will be making payment directly to the church.  Once the land contract is paid off then the deed would transfer to me as the owner.  There was a real estate broker on the board at the church, Bonnie Smith. She asked me if I was a real estate agent.  I told her I was not and asked her why she asked?  She then asked me how I knew so much about real estate.  I thought for a moment then said, “Well…..I read a book…..”  (I’m laughing)  I went to seminars with my brother-in-law and read several books.  I had purchased real estate investing audio programs from TV Guru’s, Carlton Sheets and Ed Beckley. She then asked me what I do for a living.  I explained that I just sold my gym and that my wife Lori and I are starting a tanning salon. I have a DJ and video production business and have some free during the week.  Anyways, she asked if I was interested in becoming a real estate agent. To get my real estate sales license in Ohio I would need to take some training classes and show proof to the real estate board. I would also need a real estate broker to sponsor me in order to take the classes and apply to take the state test. She would sponsor me so I could work for her and she could show me the ropes on real estate.  Sounds like a great idea.  I went through that process and got my RE license.  After working in her office for a couple days I figured out I did NOT want to work as a real estate agent.  I was answering the phone and making appointments for other agents but not really doing anything for investing.  I told her I was done and not to put me on her schedule.  She was obviously disappointed however, she suggested I talk to a Floyd Jones. He was the VP of lending at this local community bank, Potters Savings and Loan.  He has a special finance program put together for their, REO’s or ‘Real Estate Owned’ by the bank after they foreclose on them.  The program was $2000 down on any of their properties as long as you live in the property. If you are buying it for investment you need 20% down.  The terms either way were 9% interest for 30 years with no closing costs.  They finance the properties but you have to have money to fix them up.  He gave me the list of about a dozen properties and I drove past them all.  There was only one I was interested in and it was in a lake resort area out in Negley, Ohio called, “Lake Tomahawk”.  This was a really nice HOA with lake front properties, a beach with swimming, boating, fishing, a marina, etc, etc. etc.  We agreed on a price of $32,000.  $2,000 down.  I had money from the sale of the gym. 

We needed a plan for designing the tanning salon in the upstairs level of our house and the property we’re buying from the bank needs some work before we could live in it. I didn’t know anything about construction so I contacted my brother since he was a contractor is West Virginia.  He could give me the cost to fix up the property in Negley and the design and construction for the tanning salon upstairs in our house.  He was a bit put back when I called him about all this.  He asked if I had got a job already since selling the gym.  I told him no and that I already had one rental and got my real estate license, etc.  He didn’t sound like he believe me. He ended up coming to the properties to see what I was doing.  I could tell he was surprised. Before we left he suggested we do something together with real estate.  The last interaction we had was back when I was in college doing the Amway stuff with him.  I never renewed my distributorship with Amway after Lori and I sold the gym.  My brother didn’t renew his either. We had some details to figure out. I didn’t have a formal, “job” so our primary source of loans was using Tom’s credit. He suggested I work for him as an employee so that I could build up my credit for future deals, etc.  We moved into the house at Lake Tomahawk, built in the tanning salon upstairs in the first house and I worked with Tom learning how to do carpentry, electrical and plumbing work.  We did 6 flips and 6 rentals in a 5 year period.  As I was learning to do more, Tom’s schedule was busier and he started making excuses for showing up to work on our projects.  Our agreement was we would be 50/50 in money put in, he would do the rehab, I would do the management if it were a rental and I would do the marketing to sell it if it were a flip.  50/50 split.  Sounds great, right?  It started off great but then over the 5 years it was me doing 100% and getting 50%. It was frustrating. My wife and I were arguing about how I was working an hour or more drive to work with Tom on jobs and then working on our investments by myself along with managing tenants, etc. It wasn’t a balanced partnership. We were doing fine on our own before and didn’t need him to invest. He had only worked on jobs for other people and his personal residence but had never invested on his own. What are we going to do?

My father-in-law suggested I apply to work at this chemical company in manufacturing where I could make $25-30/hour plus medical benefits, 401k, retirement, vacation time, etc.  Only drawback was the schedule was shift work, which included working weekends.  However this would work out great since the midnight shift finishes up on Friday so I would have weekends off and would be able to do the DJ business (primarily weddings).  I couldn’t take a job where I would have to work for 2 weeks to equal the same amount that I could make doing a wedding in one day.  With the shift work I could do BOTH.  I broke the news to Tom that I couldn’t work for him since I found a better paying job. I started working at ARCO Chemicals in 1991.  We sold all the properties we had with my brother however Lori and I continued to invest and the tanning salon did well. 

Since the tanning salon was located in our personal residence and then we moved to the new house the down stairs was vacant. There was no room to expand due to state requirements and since there was no room for more parking. The neighbors were already threatening to call the police and have customers towed for parking on their half of the drive way. We ended up buying an old railroad station that was turned into apartments in the 1970’s.  it was less than a quarter of a mile from our current location. The original owner passed away and left it to his son. It had been vacant for nearly 10 years and was not habitable.  He had it for sale for over a year with no buyers.  After hounding him for over a year I finally explained to him that the property wouldn’t qualify for financing due to the dilapidated condition.  The property was 2 stories, 25X125 on each floor on about 1 acre, behind a corner lot with 150 ft frontage on 2 highways.  The deal I offered him was $2000 down, $300 a month payment, half of which is to reduce the principle balance and the other half was his to keep.  In 2 years if we couldn’t pay off the loan he could agreed to extend it one year however I’d have to pay an additional $100 a month which was his to keep.  This was an incentive for him to let me do it and for me to get it done.  3 years pass and we still couldn’t get financing from a bank since the property wasn’t completely habitable.  I had the outside completely done. We moved the salon from the house to this location but only had half the inside renovated since we only needed that much space and didn’t have funds to complete it.  We finally ended up taking a HELOC on our personal residence to pay off the owner finance.  We rented the first house after moving the tanning salon and expanding to the new location in 1993.  We had 3 tanning beds at the house and opened with 6 beds at the new location. Each year after that we added another tanning bed until we maxed out at 14 units some years later.

Lori and I had a son, Timmy in 1988 and a daughter, Whitney in 1990.  We continued to expand the tanning business and added on other businesses to offset the off season.  We purchased a travel franchise, “American Dream Cruises”.  We established a distributorship with Venus Swimwear and were their regional location.  We purchased a package of vending machines at a home based business seminar and placed them at local businesses.  We finally finished the second half of the tanning salon building and added a personal training facility.  I was competing in bodybuilding shows and obtained several certifications from national training companies for personal training.  I won the, “Mr Pittsburgh”, the Mid Eastern States championship and the Nationals in 2001.  I retired from competing in 2002 after realizing my injuries were preventing me from training at the level I would need to compete at a professional level.  We continued to promote bodybuilding and fitness shows for a few years after that.   Most of the competing and contest promotion was to promote credibility for our personal training business.  In 1996 we opened a second location for the tanning salon in Boardman, Ohio.  Lori and I continued to purchase one property or more per year (hold or flip) until 2001 when we were holding about 12 properties not including our personal residence. 

We had accumulated over $150,000 in credit card debt due to the business purchases, start ups and upkeep.  We had 26 credit cards. I was working at the chemical company and still had all the other businesses.  The guy I worked with on my shift, Eric, asked if I had seen the infomercial on TV last night about the real estate investing.  I told him I had not seen it however I had been investing for years.  As usual, the guy on TV, Russ Whitney, was promoting becoming wealthy from real estate investing.  I began thinking that it had been some time since I reassessed my investing goals and needed to pay off some debt.   This was sometime in July 2001.  Eric and I agreed to meet at the live event in Boardman, Ohio.  There were people there that had actually rented from me over the years and some well dressed folks as well.  I was in my work clothes since I had come from there.  The meeting was about 2 hours.  Half way through the speaker said it was going to cost $1,995 for this 3 day training that would contain much more information.  After the break, half the people didn’t come back.  The speaker told us that we were the people they came to see since this is not for everyone.  Eric said he thought it was a scam and I ended up signing up for the 3 day training.  The 3 day training wasn’t until October 2001, about 3 months away.  Lori didn’t want to go so I went by myself.  Over the years I had other people that I had looked up to for advice as a ‘mentor’ figure.  At this 3 day training they kept emphasizing having a mentor.  The first day this speaker, Glenn Purdy, was talking about all these different strategies, how they apply to real life, goal setting, wholesaling, lease options, creative financing, etc.  When I got home I told Lori that this was different than what we had gone to in the past and it had been more than 10 years since we had gone to any real estate related events.  He kept my attention and was a great speaker.  He even had a contest for a free trip to one of their national events.  Some of the things he said that resonated with me was ‘taking action’ and if you want something in life, just ask for it.  Lori went with me the second day and agreed that this seemed to be more detailed than the other seminars we had been to and we really did need to do something about the credit card debt we had.  Day 3 we signed up for more classes.  We only got 2 classes since we can always add more later, after we do some deals. 

I was training for the National Bodybuilding championship coming up in Rhode Island in a few weeks.  One of the coordinators asked me what I was doing for me workout since I looked great.  I told him I was a personal trainer and he could purchase a workout program, etc.   He offered to trade me ‘information’ on how to win the contest in exchange for a workout program.   The speaker must have heard our conversation as he came back to the back of the room and was standing there with his arms crossed looking at me as if I had just took my hand out of the proverbial cookie jar.  Glenn said to me, “Tim… what are you doing?”  I told him I was discussing a workout program with his coordinator.  He kept repeating his question and I kept repeating my answer.  He finally said, “What did I tell you on the first day?  If you want something, ask for it”.  The light went on over my head.  I said, “Glenn, How do I win the contest?”  Glenn said, “Tim, I’m glad you asked since you were the first (and only) one to ask me how to win the contest, my intent was to get you to learn how to ask for things, so YOU are the winner, congratulations!”  I won an all expense paid trip to Orlando, Florida to their national real estate conference where there were like 1,200 people.  This included the hotel, all events, all meals, etc.  This was about a $3,000 value and I had planned on going anyways.  The event wasn’t until Valentine’s day weekend in February 2002.  I couldn’t wait until February to get started however I didn’t have any more vacation time through 2001 since I had used it up for weddings when I couldn’t get time off work. 

We took our first class in January 2002.  We flew to Atlanta, Georgia to take their, ‘Foreclosure’ class with Pete and Tony Youngs.  They were very entertaining, however much of the information I already knew since I had purchased many properties from banks and through auctions, etc and had gone through title searches and that whole process as a real estate agent years ago.  Great info, just not enough for me. After the class I went up to Tony and asked him what class I should take next since I only had one class left.  They had about 16 different classes available on various topics.  He asked me about my background, etc and finally told me I need to take about 5 different classes.  I explained I only have 1 left and I don’t want to buy more until I make some money. He suggested I go to the big conference in February, which we were already scheduled to go to. 

February 2002 we went to Orlando, FL, staying at the Caribbe Royale Hotel in Orlando.  There were speakers scheduled throughout the day on different topics.  Over 1200 people attended.  They had videos playing featuring students with talking about the deals they had done and the profit they made, etc.  One guy that looked and sounded like he barely made it out of grade school said he made over $1M in his first 18 months.  Ok, If THAT guy can do it…… What’s my problem?  I’ve been investing for a long time and was still in the ‘rat race’.  We ended up upgrading, buying 2 more classes and signed up for their ‘Mentor’ program.  We went home all ‘fired up’ and ready to do something, anything.  I was so tired of working all the time and not sleeping due to my debt.  The more money we made, the more money we spent. It was like being broke at a higher level. (I don’t recall who said that but it was back in my Amway days when I heard it) The very next day I thought to myself, “what was I doing before when I got started in real estate?  I was doing for sale by owner and off market properties.”  I got in my truck and drove down town where I already had some properties and recalled seeing some distressed properties.  I’m writing down the addresses of properties that are run down, vacant, fsbo, etc.  This one property on a corner lot I saw had a ‘fsbo’ sign in the yard but the phone number had worn off the sign.  I went over to the neighbor who was outside, just getting out of her car and asked her if she knew anything about the house with the high grass across the street.  She said she didn’t know much about it.  The previous owner never talked to them much but one of the other neighbors said they may be in foreclosure.  They moved out about 6 months ago.  Then she asked me, “Are you looking to buy a house?”  I told her I was a real estate investor and looking for anything.  She explained the neighbor right next to her is probably going to be selling their home.  This house is right across the street from the other house I was looking at, which is also on the corner.  They moved out to Guilford Lake about a year ago (that’s about an hour from here).  I asked if they had rented it out since it looks occupied.  She said that it was empty and that someone had broken into it a few days ago.  The couple that owns it doesn’t know what they’re going to do.  She said, In fact, “they just left before you pulled in….”  I asked for the owners phone number so I could maybe make an appointment to take a look at it.  She reached over to her picnic table picked up a set of keys and said, “they left me the keys so I’m sure if you want to see it they won’t mind.”  (can you say right place at the right time?)  We looked at the property.  It needed about $1500 in clean up to rent it out and about $12,000 to update it for a flip.  I called the owners on the her land line phone since I had no signal on my cell phone.  She was very polite.  I explained what happened and the neighbor lady said they may want to sell.  “Yes, we want to sell”, she responded.  I asked, “Have you thought about how much you may want?”  She replied, “Well, we talked to a real estate agent last year and she said if we wanted to sell it fast we could list it for $25-30,000.”   We agreed to meet the next day around 11 AM at the property. 

I’m thinking to myself, “Ok, now what do I do?  I need a contract so I can make her an offer on the spot.”  The software I got from Russ’s seminar had a contract in it so I just used that one.  I was typing in the details, property address….. owners name… buyers name…… purchase price…?  How much should I offer?  I wasn’t sure how much it was worth as is or fixed up and there were no agents involved.  Then I remember one of the speakers at the conference saying, “50 cents on the dollar of the asking price”. The owner said on the phone she may take around $25-30k so half of $25k would be about $12,500.  So I typed in $12,500.  I thought, “Wait, they’re not gonna take that.”  Then I remember one of the speakers saying, “if you’re not embarrassed with your offer, it’s not low enough!”  I was rather embarrassed with my offer so I’m going with it.  I printed out the offer.  Went to the house the next day to meet the owner I had talked to on the phone and she didn’t show up.  The husband had showed up instead.  I had no idea what his demeanor was going to be.  I stood on the sidewalk and saw him coming out of the house.  He was an older gent, had a red flannel shirt on, buttoned all the way up.  He had a ball cap on and was limping, with a cane.  Now I’m feeling guilty.  “I’m gonna steal this old man’s house and he can’t even walk”, I thought.  He was chewing tobacco and spitting and was about my dad’s age so I felt a bit intimidated.  Finally, I walked forward reaching out my hand to shake his and said, “Mr Haycock.  How are you sir?”  He quickly replied, “I’m fine.  How much you gimme for muh house?”  I stuttered a bit then finally reached out to hand him the contract saying, “It’s right there in the contract if you want to take a look.”  He leans over, glances at the contract and say’s, (in a much louder tone) “I ain’t readin that.  How much you gimme for muh house?!”  I could feel my heart pounding now as I was stating all the things I needed to fix on it, “it needs a new water heater, the spigots in the kitchen need replaced, the floor in the bathroom needs replaced and….”  He interrupted saying, “Yeah, yeah, yeah.. I  know all that, HOW much you gimme for muh house!?”  I stuttered, “uh twelve thousand…. five hundred… I’ll give you five hundred today then the balance at closing…”  He looked over his glasses with a frown and said, “WHAT did you say!?”  I’m really having some flashbacks of my dad taking his belt off now….  Then I said, “twelve thousand…”  He interrupted, “ILL TAKE IT!”  I’m standing there with my jaw dropped thinking…. “maybe I should’ve said Ten ….?  Was the basement wall caving in….?  did I miss something here?”  I’m now having second thoughts and thinking of a way to back out. I finally asked if his wife was on the deed and he said she was.  We agreed to meet tomorrow around noon so she could sign the contract.  I went back to my office and typed a new contract that says “$12,000” not “$12,500”.  He said he would take it before I even got 500 out.  The next day we met at the house and the very first thing he said to me was, “Now how much did you say??”  I repeated, “$12,000.  $500 today and the balance at closing…”  He said, “that’s what I thought you said”, as he pointed to his wife in confirmation.  I said, “ok.  We’re going to use THIS contract…”  We didn’t have much cash and I didn’t want to tap into business reserves so we used credit cards by using a credit card check, transferring funds to our personal account.  We went to a local attorney for closing and split the closing costs. 

Lori and I fixed the property up ‘rental quality’ and rented it out.  The following month I talked to the bank I have my business accounts with and asked if I could borrow money from a rental property to pay off my personal credit cards.  He immediately said I could and asked how much the property is worth.  I explained I wasn’t sure and there was no mortgage.  He didn’t ask, “How much did you pay?” or “How much do you have in it?” He did say they would need an appraisal.  The appraisal came in at $58,000.  He said they could loan about 80% of that or about $40k after costs,  “Is that okay?”, he asked.  I said, “let me think about it…. OK!” (half a second later)  I’ve only got $14k in it and they’re loaning me $40k.  I still own it.  The tenants are paying off the mortgage.  If I sold it I would’ve had to put more into it to sell it for the $58k and there would be closing costs and commissions and taxes… yuck. 

When I got to work the next day I told Eric what happened.  He said, “oh man, I knew I should’ve gone to that seminar.  That’s more money that we make in a year at our regular pay.”  I agreed.  That morning we had maintenance working on one of our machines and one of the crew was in our control room.  He overheard our conversation and added to it by saying, “Yeah, I invest too…. I have a couple rentals.  I bought them through my real estate agent.”  I commented that I don’t normally use or need real estate agents to find deals.  He said, “No, this guy specializes in working with real estate investors.  He has bank owned properties and foreclosure stuff.”  He gave me the agents name and number and I called him later that day.  I don’t recall the agents name so I’ll just say his name was, “John”.  John explained he had some multi-family stuff and a great one that’s perfect for me.  “It’s on East Avondale Street”, he says.  “That street sounds familiar,…. Oh yeah, last night on TV….., ‘drive-by’ shooting.  I’m not interested”, I said.  “No, no, no.. it’s a good area.  You really should take a look at it.  We can drive through the neighborhood and if you’re not interested then it’s ok, but you really need to take a look”, he insisted.  We made an appointment to look at it the next day.  We crossed over Midlothian Boulevard which is the ‘invisible curtain’ that enters the ‘war zone’.  Instantly you can see the blight with boarded up homes and high grass on the entire block.  Now I’m asking myself why I let him talk me into this.  As we made a right onto Avondale Street I saw some tennis shoes hanging from the power lines indicating there’s a drug dealer nearby.  My wife announces from the back seat, “You guys can leave me the keys when you get out and if you’re not back in 10 minutes, I’m outta here.”  We laughed but she didn’t.  As we’re driving over the railroad tracks and pass the middle school I notice the occupancy gets better, the quality of the housing gets better and it’s looking more like a working class area.  Then all of the sudden John pulls over his car and pulls out his map.  I asked if we had passed it up and how far back it was.  He said, “No, this is the house right here” and pointed out my window.  This house looks great.  The neighborhood looks great.  The lawns are all manicured.  As we get out of the car I walked around the house and didn’t find any major structural issues.  Once he opened up the front door we went through it to find it only needs about $500 in clean up to get it ‘rent ready’.  A 3 bedroom, 2 bath house with a full basement and double car garage.  Nice level lot.  How much are they asking?  He said, “They started at $48,000 then dropped it to low 40’s then 30 something twice and now it’s listed for $24,000”.  It’s been on the market for well over a year.  “Why hasn’t this house sold?!” I asked.  “The same reason you didn’t want to take a look.  The name of the street scares people off.  This street goes all the way through the city and some of the nicest homes in the city are on the far end of this street”, he replied.  I just applied for the loan on the other property we just picked up for $12,000 and my credit cards are nearly maxed out.  I pulled out a folder with all of my credit card statements and checked to see how much I had available.  If I maxed out my remaining credit cards I’ll have about $13,600.  I said to John, “I have about $13,600 to offer on it if I pay cash”.  He said they wouldn’t take that amount.  I reminded him that it’s been on the market for over a year and they’ve dropped the price 4 times.  He then told me he knows how they calculate their asking price and it’s about 10% each drop.   If I wanted to make an offer he wouldn’t go any lower than 10% of the list price.  I told him that all I have is $13,600 and if I make an offer that’s the best I can do.  He finally shook his head and agreed we can give it a shot.  We wrote up the offer and John gave me more details on the property and the seller.  It was owned by the state of Ohio and they are accepting offers up until 5 PM today. They will be looking over all the offers they get and will announce the winning bid by 10 AM on Tuesday, the next day.  The next day John called me that they had accepted my offer.  We got it for $13,600 and my credit cards are now maxed out.  The same day we closed on it I went to the bank where I had the loan on the other property we just purchased and told him I had another property.  Once we got it rented out I applied for a loan.  The appraisal on that one came in around $52,000.  We got another $40,00, tax free money.  We didn’t sell it, we borrowed money against it and the cash flow on this one is about $50 per month after all expenses and allowances. 

In April, 2002, we went to our second class, “Asset Protection”.  This was taught by an attorney, Sean Casey.  They had a lot of options with various price points for their products depending on your risk tolerance and budget (and intelligence).   We got them to set up a couple entities for us so we could use their services.  When we got back home I made more offers on some MLS properties.  One in particular was a package of properties from another investor.  We finally got an accepted offer but it will take some time and diligence to get it closed. 

July, 2002 we went to the commercial class, taught by Gary Tharp.  Gary has the highest designation you can get as a real estate broker CCIM and he actually wrote all of the standard contracts for commercial use across the U.S.  Sharp guy with a great sense of humor but very dry.  I dozed off a few times in class and not because I wasn’t sleeping well.  I picked up a few ideas and made several offers on some commercial properties later that month.  I go into how we financed them in one of my training sessions on financing. 

From the time we came back from the Real Estate Conference in Florida back in February until August we closed on quite a few deals.  My next step was to have the Mentor that I paid for to come out and work with me to take us to the ‘next level’.  I called to schedule in May and they told me I needed to get some signs made and put out and get some ads in local newspapers.  When I asked why I should do that the lady on the phone said, “So we can wholesale!”  I could feel the frown forming on my face and then I replied, “I’m not interested in wholesaling.  I already own a bunch of properties and looking at commercial now.”  She changed her tone and then said that I would probably need an “advanced mentor”.  I agreed since that sounded like I was getting a better ‘bang for my buck’, however this “advanced mentor” wasn’t available until August.  No worries.  A few weeks later I got a call from a Ron Gray.  He was scheduled to work with me and he needed some information about me, what I wanted to do, goals, etc.  We set up for him to come to Ohio from Florida starting August 7th.  He will be here for 4 days.  There’s also some homework I’ll need to do to prepare for him coming up to work with me so we can make the best use of our time.  He sent that about a month prior to our time together.  I was so busy I didn’t have time to do it so I sent it to one of the real estate agents I was working with since much of it was regarding local government offices and contact info that she probably already had access to. 

Ron was going to drive from a friend’s place he was visiting somewhere in Virginia.  He agreed to meet us at our office at the tanning salon on the first day.  We gave him some hotel references where he could stay while he was here.  Ron arrived and we went over the homework.  He said someone at the office said that I already owned real estate.  I agreed and told him we had been investing since 1985.  He then suggested that we, “go take a look at them.”  I was thinking that would take some time however we were going to just drive by them.  As we were driving by our properties I was pointing out which ones I owned and had a few more around the corner and in one town I owned the entire block. When I said that Ron looked over at me and asked, “Just how many of these do you own?!”  My reply was, “When I close on this deal I’m working on next week I’ll have 60.”  His eyes opened wide, his mouth even wider and then said, “Then what do you need me for?!”  I told him I was passing up deals because I didn’t have time to do more deals.  He asked me where I spent most of my time and I told him I spend 40-60 hours a week in my full time job.  He acted surprised and commented, “you have a JOB TOO?!”  You have all these businesses, the real estate, a full time job and a family.  When do you find time to sleep?  My reply was, “ I usually sleep while I’m driving.”  I probably had one accident per year for the last 10 years due to falling asleep or hitting a deer on the road or both.  The biggest reason being I was tired from not sleeping, going from my ‘job’ to meet someone for a personal training session or meeting a home owner to make an offer on their property or fixing a tanning bed, etc.  Ron asked how much time I spend and how much money I made at this “job’.  I told him I cleared $1500-1800 every 2 weeks but that included overtime and they take out for union dues, taxes, medical insurance, etc.  And then he asked how much time I spent and how much money I make with my real estate.  Between the job, the DJ business, the video productions, personal training, managing 2 tanning salons, seeing my kids and sleeping I have about 10-15 hours a week on the real estate and our cash flow at that time was just over $25,000 per month.  Ron’s eyes got big again and then he said, “So it’s a no-brainer to me.  Why do you have this job?”  I sat quiet for a minute then replied, “I get an extra week’s vacation this year?!”  Then I laughed and added that I have medical insurance.  Ron said, “I can’t believe you just said that.  How much would insurance cost if you paid it yourself?”  I had no idea.  After checking with a local insurance company I found it would cost me about $700 a month for health insurance for my wife and our 2 children.  Then Ron asked me, “How much is enough?  What are your goals?”  I had to think about it for a minute since I had been so caught up in taking action, I had lost track of where I was trying to go.  Then I said, “When I was in Amway, the speakers at their events kept going on about how they were all, “Millionaires”.  It’s like all they do is travel, spend money on expensive ‘toys’, cars, houses, etc don’t have to work or worry about having money anymore and they are always giving money away and are always happy.  So I was always working towards becoming a millionaire.”  Becoming a millionaire is like playing a video game.  When you beat a level, you get all the good weapons to make it easier to kill all the zombies.  Once you win you’re herald as the best.  All these fireworks go off and music plays, etc.  Ron replied, “Where are you with that?”  I told him I wasn’t sure since I had been so busy I lost track but I had been tracking everything on a spreadsheet.  He told me to bring my spreadsheet tomorrow and we would take a look.  That night I when I got home I updated my spreadsheet with all the properties we had purchased and I found that my net worth was now over $2 Million.  After I double and triple checked my math, I was poking myself to see if I was dreaming.  I had over $150k in credit cards, those are now paid off and my net worth is over $2M.  Where’s all the fireworks?  No music playing.  I have all these responsibilities, employees and expenses to take care of so it wasn’t the ‘imaginary’ life that the  Amway people had portrayed. 

When we went to lunch on the second day, Ron shared more of his background with me.  He previously owned a furniture store chain and sold that business when he turned 40 years old.  He then sailed around the world for a year before deciding to check into doing something else.  A friend of his was involved in developing land and was discussing with a local college about an expansion.  Ron ended up getting an option on some vacant land near the college, developed it and then sold it to the college making over $1 million profit in the process.  This was his FIRST real estate deal.  I don’t recall all the details and didn’t take any notes.  Ron gave me much insight on things I could do to simplify and focus on more important things identified by clarifying what Lori and I really wanted to do.  During my time with Ron we looked at some vacant land to develop, made some offers on commercial properties which panned out to be deals that we closed on later that year. 

A few months later Ron reached out to me to see how things were going.  At this point I had quit my ‘Job’ at the chemical company and sold or discontinued some of the businesses that weren’t as profitable as we had believed they could be based on how much time we were spending at them.  He finally got to the point for his call by asking me if I was interested in “Mentoring” for Russ’s company.  I asked him how much it was going to cost and he said the only cost I would have would be in travel expenses during my ‘training’.  I would need to follow another mentor while they were conducting a mentorship with a student, simply to observe, take notes and come up with an outline for how I would conduct myself when mentoring a student once my training is completed.  The requirements were the ‘Mentor in training’ (MIT) would need to train with 5-7 different trainers.  The MIT would be required to share financial records providing proof that their net worth was at least $1M and show proof of real estate transactions such as a deed, closing documents, articles of incorporation, tax returns, etc.  I told him I was interested and spoke with a representative from the company regarding scheduling to follow the mentor trainers. Each one of my ‘trainers’ told the director of the program that I was ready to go from day 1 as I had more transactional experience than most of the existing mentors and trainers.  Most of the mentors specialized in one strategy such as ‘wholesaling’ or ‘flipping’ or ‘lease options’, etc.  I only went out to train 4 times and was deemed ready.

April 2003 I went on my first solo mentorship in Overland Park, KS.  My students were both real estate agents and had been so for over 14 years at that time.  By the end of the 4 days they were asking me questions about every move they were going to make.  After each mentorship the students are supposed to complete a survey on how the mentorship went and if they want to leave any comments.  These students wrote in their comments that I had the correct answer to every question they had for me and that they couldn’t believe how much they learned since (in their own words) real estate agents are supposed to know more than investors.  Since that time I have personally mentored over 1400 students from all over the world.  In 2004 Lori and I were inducted into the International Real Estate Hall of Fame.  Many times after that I was nominated for ‘mentor of the year’ and received it twice.  I also became not only one of the mentor trainers but the lead trainer for the training program in 2004.  Part of my activities there included rewriting the program for trainers to train new mentors and creating a better process for students to better communicate with their mentor before and after their mentorship.  In 2006 I started teaching classes including, “Rehabbing for Profit”, “Wholesaling”, “Lease Option” and “Foreclosures”.  I’ve been asked to teach other classes including “Commercial” and “Creative Finance.”  I’ve written many articles on creative financing, segmenting, rehabbing and created the classes, “Private Money”, “Fund, Fix and Flip”, “Time Management” and “Strategies for Raising Capital”.  I’ve spoke on all these topics including many that follow in this training, at many events and assisted with thousands of deals over the years.  Lori and I own or have owned many properties including single family, multi-family, mobile home parks, commercial, office, warehouse and have participated in syndications in Costa Rica and Belize.  We’ve completed transactions from all of the exit strategies I teach and have many, many students from all over the world that keep in touch, sharing their success stories.  The brands that I’ve had the privilege of working with include Russ Whitney, Montel Williams, Donald Trump, Peter Lowe, The Rice brothers (John and Greg Rice, ‘Worlds shortest twins’), Tarek El Mousa (Flip or Flop shows) and Robert Kiyosaki (Rich Dad Poor Dad).  Many of my training sessions include more success stories that include not only my successes but my students as well. Looking forward to creating success stories with you. Hope you noted my points learned in this section and use them to make your journey worthwhile. Here’s to your success!