Real Estate lessons my Dad taught me
Dad was the son of a Swedish immigrant who decided to start a dairy farm in northern Wisconsin. My dad grew up milking cows every day and not having much fun. Back then, dropping out of school was common, and you were not looked down upon for stopping. My dad lacked an education, having never finished high school; he’d say, “Don’t need a high school diploma to milk cows.” “You were going to milk those damn cows”, as he called them, “for the rest of your life, and who needs to go to college or finish high school to milk cows? The cows don’t care; you just need to know how to work and work hard every day”. Also, back then, you milked those damn cows by hand. No milking machines. One would sit on a stool, milk one cow, and then another until one was done with all thirty cows. It wasn’t until my late twenties that I realized that you had to milk those damn cows twice a day. That’s right; you milked them every 12 hours. So, if you did it at 4:00 PM, you'd better be up early at 4:00 AM to do it again. And no days off, no holidays, vacations, sick days, every day 365 days a year, you were going to milk the cows. You even had to milk them on Christmas. I believed, based on the stories I wanted to hear, that dad got up at 4:00 AM, milked those damn cows for three hours, walked three miles to school through five feet of snow, and back home, and you were done; no time to watch TV, raid the refrigerator, and play video games. How hard a life can that be? Based on what I know, my dad quit school because he was so exhausted; he ran out of energy. Plus, the lack of electricity, central heat, indoor plumbing, and refrigerators was also a good reason.
But dad’s best accomplishment ever was just around the corner; he stopped milking those damn cows. As soon as my dad’s father passed away, he sold those damn cows, the house, and moved grandma into town. (I saw the farmhouse; it was a good idea to sell it. Later, after marriage and four children, with $500 in his pocket, he packed up the old 1957 Mercury, put the three kids in the back seat with mom and me in the front, and took off for California, towing a pop-up camp trailer. Fortunately, during the time he stopped milking’ those damn cows' and having 4 kids, he learned a new trade, fixing TVs.
I’m glad we moved out of Wisconsin and did not learn to milk those damn cows. Dad said, “If we stay in Wisconsin, we’ll either freeze to death or starve to death; if we move to California, at least we won’t freeze to death”. Dad would often say this as a joke, but deep down, he knew that with four kids, living in northern Wisconsin, and very few job prospects, it was a possibility.
Dad’s first home, which he purchased in California, was in Monrovia on Pamela Rd. He bought it in 1960 for some ridiculous low amount and too long ago to remember, but he sold it in 1972 for $11,000. Dad should have kept it and rented it out. Payments on the house were $29/month. Rents would generate around $100/month, a positive cash flow of $71. But for some reason, he thought he could not do it. It just did not make sense to Dad. He probably never thought of the idea or considered the possibilities.
Dad started fixing those damn TVs for Sears, and he was good at it; he became an expert. So good that Sears wanted him to teach others the skill of fixing those damns TVs. As a result, he received a promotion and more money, but one major problem was about to come back to haunt him – no high school diploma. Mom and Dad would talk about it at night in whispers; they would say, “Do you think Sears will find out? Will you lose the job?” I heard a new word for the first time – Night School. I was too young at the time to know what it meant. We did not discuss it, and I did not know until later in life that Dad went back to school, got educated, and graduated from high school. Fortunately, he keeps his job, continues to make more money, and is now able to purchase a second property.
This second home, a vacation property, was up in the mountains in Frazier Park, about 70 miles north of Los Angeles, in the middle of nowhere at the time. It was a nice cabin with two small bedrooms, a much bigger house than the house on Pamela Road. Two homes at the same time, a nice leap in financial prosperity.
The interim home, between the house on Pamela Rd and the Cabin, was a house on Ridgeside Drive in Monrovia's upper-class section. This was a great purchase for him. Cost was $29,000 in 1972, in a great location up in 
the San Gabriel Foothills of Monrovia; purchased at the right time and with the right financing terms: a fixed 6% note. A bigger house, with views of the city lights, where all the rich people from the church lived. When the cabin was finished, he rented this property to move to the mountains. Good idea to rent the house. A very good positive cash flow, and the homes in the area were appreciating. The mistake here was making the mountain home his permanent residence. Mom always said, “It was a mistake moving here,” and she would say it often to Dad. However, he got cash fever and no longer wanted to rent it out, so Dad sold the house for $110,000 in 1979. A great investment: he netted around $90,000, quickly put it in the bank, and then began spending it on depreciable assets (cars).
Fortunately, when he had to make the move to the fourth house due to mom’s illness, the house in the mountains appreciated in value. He realized his mistake of moving to the middle of nowhere, with no jobs, no income, and no medical facilities. The nearest hospital was 90 miles away down Interstate 5 – the “grapevine”. Dad desperately needed to move again. His final purchase was another mistake, a double-wide in Castaic, CA. He netted around $100,000 for the mountain house, but again started spending it on depreciable assets (cars) for himself and my sister.
I can’t blame my dad for doing the moves. To him, owning a second home was just not right. To this very day, when I try to explain real estate to some of my relatives, they just give the deer-in-the-headlights stare. My relative once said this about owning two homes: “Oh, that can’t be legal”.
It’s just that we were not taught this in school. We were told to get a good education, a good job, a house, and a mortgage. Hopefully, in say 30 years, you can have your home paid for and retire on Social Security. This financial plan is still what two of my siblings live by.
In fact, it took me until I was 50 to realize the number 1 rule.
If my dad were to keep the homes, financially, he would be ok. The first house appreciated from $12,000 to around $550,000. The second house went from $45,000 to $250,000 (cabin), and the jewel in the upper-class part of town changed from $29,000 to sell over $950,000.
Of course, looking back, it's easy to see the mistakes. There were market downturns when nothing was selling.
Rule 1 Don’t sell real estate – accumulate it
Matt Prosory RI/MLO/Broker
NCO Enterprises LLC
Private Hard Money
DBA Setabay/SetabayLoan/Level 4 Funding
26731 N 90th Drive
Peoria AZ 85383
Matt@Level4Funding.com
Telephone: 623-582-4444
NMLS 2062278 NMLS 1118493
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