business

Real Estate Investor: Pounce When the Time Is Right

The third of eight ways entrepreneurs, investors and savers have made a million. Find out how they did it and read all eight.

Millionaire Lesson No. 3

Identify trends and be patient, even if it means waiting a decade to make an investment.

Make a million in real estate?

Today? You must be kidding. But where others see a housing bust, Robert Norton sees opportunity. He sold his home for a profit of nearly $2 million last year, and he sees many similarities between today’s Los Angeles housing market, where prices have dropped by about 20% over the past year, and the market when he bought that house in 1997.

Norton, 52, spent 25 years as an entertainment lawyer, working first for Jim Henson’s company (of Muppet fame) and then Mattel. But real estate was his passion.

He’d been buying and selling inexpensive properties since the early 1980s, and watching the housing market carefully for a big investment. He pounced when he saw the price for a six-bedroom house in fashionable Bel Air drop from $1.1 million to well under $1 million. So he offered even less ($750,000), closed the deal in three days and moved in.

Then he waited, knowing that real estate cycles in the area tend to last seven to ten years. When he sensed a downturn coming in 2007, he sold the house for more than $2.8 million. Says Norton, "It’s a matter of sitting and waiting and having the flexibility to be patient."

Norton quit his job and now focuses full-time on real estate. He didn’t invest all his profits right away, he says, "because prices can still come down." Now he owns a smaller home for himself in Long Beach, a vacation home in Palm Springs and three houses that he rents out while he prowls the market for attractive properties at good prices.

Aware that today’s downturn may last a long time, he’s careful to run the numbers before buying a rental property. "I won’t buy a rental property that does not have a positive cash flow, and that includes accounting for taxes, insurance and maintenance as well as the mortgage," he says. "It has to generate as good a return on my money as other types of investments. Then any future appreciation is gravy."

Norton generally puts down 20% to avoid private mortgage insurance and to qualify for the best loan rate. But he doesn’t put down any more. That way, he leverages his money. Norton is also careful to diversify his investments. For instance, the retirement accounts he built up while he was a lawyer remain untouched.

His advice to real estate investors: "The house should appeal to a broad spectrum of future buyers, and not just be something you like because it’s uniquely your taste. And in a down market, the old adage ‘Location, location, location’ is more important than ever."

EIGHT MILLIONAIRE PROFILES

1. The Video That Took on a Life of Its Own

2. Know When to Make the Call

3. Pounce When the Time Is Right

4. It Started Over Cocktails

5. A Thirty-Year Plan to Make a Mil

6. Breaking With Family Tradition

7. Accumulating A Fortune on $11 a Hour

8. Suddenly It Clicks

Most Popular

Where's My Stimulus Check? Use the IRS's "Get My Payment" Portal to Get an Answer
Coronavirus and Your Money

Where's My Stimulus Check? Use the IRS's "Get My Payment" Portal to Get an Answer

The IRS has an online tool that lets you track the status of your stimulus checks.
February 19, 2021
Want More Tax-Free Retirement Income? One Man’s Whole Life Decision
life insurance

Want More Tax-Free Retirement Income? One Man’s Whole Life Decision

Whole life insurance might not be something that’s on your retirement planning radar, but for this client, here’s how it served his need to control ta…
February 23, 2021
The Current Plan for $1,400 Checks
Coronavirus and Your Money

The Current Plan for $1,400 Checks

Here's what you need to know about the stimulus check plan currently being considered in Congress for President Biden's COVID-relief package.
February 18, 2021

Recommended

$15 Minimum Wage Won't Be in Final Stimulus Bill
Politics

$15 Minimum Wage Won't Be in Final Stimulus Bill

The Senate Parliamentarian says minimum wage provisions aren't allowed in the budget reconciliation bill containing COVID-relief measures.
February 26, 2021
Minimum Wage Update: Republican Senators Offer $10 Minimum Wage Plan
Politics

Minimum Wage Update: Republican Senators Offer $10 Minimum Wage Plan

Senators Mitt Romney and Tom Cotton propose an alternative to the $15 minimum wage plan pushed by Democrats.
February 23, 2021
New Challenges for a Church
Empty Nesters

New Challenges for a Church

With Sunday services online, this minister’s congregation is finding ways to stay connected.
February 22, 2021
Congress Moves Forward with Minimum Wage Increase
Politics

Congress Moves Forward with Minimum Wage Increase

Despite questionable support, House Democrats still plan to include a $15 minimum wage provision in the budget reconciliation bill.
February 10, 2021