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A Tale of Two Investors

In the beginning, I had no money.

In fact, I had more debt than money. This is the beginning of my story.

Years ago, while working in my office cubicle in a prominent bank in Makati, my officemate across the aisle happened to spy my books on real estate.

Pare, anong books yan? (Hey, what are those books?)” my officemate said.

“Ito? Mga books ni Robert Kiyosaki. Rich Dad, Poor Dad, Cashflow Quadrant, Guide To Investing at Real Estate Riches (These? These are books by Robert Kiyosaki. Rich Dad, Poor Dad, Cashflow Quadrant, Guide To Investing at Real Estate Riches),” I replied.

“Ah, nag-invest ka sa real estate? Ako rin, bumili ako ng lupa sa Los Banos (Ah, you invest in real estate? Me too, I bought a lot in Los Banos),” he continued.

This sparked a conversation on real estate investing. In our office, I did not have a lot of people to talk to when it comes to real estate investing.

Most of my officemates at that time we’re more inclined to talk about movies or women or the latest foul-ups of their bosses.

I had a superb boss so I didn’t have anything to share. Hah!

But yeah, not a lot of people had an interest in investing. Most of them think it takes a lot of capital, experience and knowledge. Maybe it’s true, but it’s a good thing I didn’t believe them because it sure wasn’t the case for me.

Mind you, I was not a highly-paid manager or corporate executive at that time.

I was just a computer programmer making around Php15,000 per month net. If I could find my payslip, I’d say my gross salary was probably Php18,000 in 2004.

My officemate’s salary was likely around that amount too since we were in the same level.

Like most people, I didn’t have a lot of savings. I lived paycheck to paycheck.

I worked so I can pay the rent, buy food and send a little money home.

If I stopped working, my landlord will kick me out of the apartment, I’ll have to eat with friends and tell my Mama that I don’t have money to send.

When I got promoted, I got the bright idea to get married. Like a hopeless romantic, I thought love will find a way.

Unfortunately, I made some dumb mistakes and I ended up with a lot of credit card debt just after we got married.

My wife had to use most of her savings to bail me out.

Not a good start to life ever after.

So I was an employee with a small salary and no savings to my name when I was discussing real estate investments with my office mate.

Not surprisingly, we had completely different approaches.

Ernie (not his real name) was great at saving. Even with a small salary, through the years he was able to save up and buy his first real estate investment.

He bought a vacant lot somewhere in Los Banos. It was located in a remote location, without any cemented roads leading to it. In short, it was in the middle of nowhere.

It was an investment he made with 3 other friends. They chipped in and bought the lot in cash. They were not sure what to do with it but it was a long-term investment.

A few hundred thousand pesos invested in land is not necessarily a bad strategy. Who knows? Maybe roads will be built leading into his lot and the area could start to develop. He’ll net a good profit from reselling the lot when it has increased in value.

I really admire Ernie because he has that good habit of saving and I believe if he learned how to invest, he would accelerate the growth of his money.

I had to take a different route because at that time I was struggling with money.

My Story of Struggle

I come from a poor family.

My father was a security guard and my mother was a public school teacher. They came from families of farmers who went to the big city to find a better life. I guess they did because I often hear tales of the hard life of a farmer from my cousins in Libon, Albay.

They were able to find jobs here but theirs was a lifetime of living paycheck to paycheck and sometimes debt to debt. Their paycheck was not enough to sustain us so they would have to get loans when the need arises.

And when a loan is repaid, they would get new ones again.

I have to commend my mother for fighting through our challenges.

I studied in Pio del Pilar Elementary School, the same public school where my mother teaches but when I was about to enter high school she wanted me to study in San Beda College in Mendiola.

She fought to keep me in private school because she believed that the standard of education is higher and our chances later in life would be better. Fortunately, I got a scholarship in high school and later college so that eased the burden of funding our education but I still had to eat, pay for transport and get clothes.

For food, I had to make do with “Star” rice (rice mixed with Star margarine), or egg or sardines. If the occasion was special, we’d have sinigang na bangus or menudo. Often it was pritong galunggong or tortang talong for ulam.

When I was in elementary school, we lived in a rented room no bigger than a parking lot. We fitted in all four of us – mama, papa, my sister and me.

My mother was ambitious. She did not want to rent all her life. We moved to  Valenzuela when I graduated in elementary and she had intended to buy a house in Bulacan but for some reason the sale did not push through.

She still ended up buying a house not in Bulacan but all the way south in San Pedro, Laguna.

Every day I would commute from San Pedro to San Beda College during high school. I would wake up early in the morning to catch the morning buses headed to Lawton.

Then during 3rd year high school, my father passed away leaving my mother to fend for 2 kids. We almost lost the house in San Pedro to foreclosure but a couple of NGOs worked with the government to come up with a loan restructuring program.

My mother hoped that when I graduated, I would be able to help her.

Unfortunately, a lifetime of poverty messed up my mindset and I repeated many of the patterns that kept us poor.

A low self-esteem led me to finish college 3 years longer than the scheduled 5 years.

Had I graduated on time, I would’ve gotten a job as a management trainee at a big oil company. Instead, I struggled to finish college and got different jobs to fend for myself. I worked as a pager operator, data encoder and college instructor before working as an entry-level contractual programmer earning minimum wage.

I also tried to sell encyclopedias and life insurance to add to my income but I did not develop into a skilled salesman. I also joined networking companies like Forever Living and The Professional Group but I didn’t succeed.

I just chugged away at my job and moved companies to increase my salary.

Even if I didn’t have savings, I had the audacity to get married.

I didn’t know getting married was an expensive proposition.

I bit more than I could chew and we ended up in debt even before saying “I do.”

We rented a small room that was formerly a roofdeck. I don’t even think it should be called a room because it only had 3 walls. One side did not have a wall. Like I said, it was formerly the roofdeck of the apartment where they did their laundry. They also had a nipa hut where they could relax in the afternoons. We rented it anyway and enjoyed our stay there.

Now, if getting married was expensive, so is having a baby. While my wife, Weng, was pregnant, we moved to Marikina to be near her mother and sisters so she can have a support system. We rented a small 1-bedroom apartment.

Don’t get me wrong, I don’t regret marrying my wife or having my kids. I only regret that I didn’t prepare for the financial challenges of marriage and fatherhood.

And now that I had my own family, I could no longer send as much money to help my mother. I was deep in the rat race, living paycheck to paycheck, reliving the cycle that my mother and father had to go through. I was a little fortunate that my salary was higher so we did not have to endure scrimping on food or getting too deep into debt.

I didn’t want my family to go through the life that I had so when I read Robert Kiyosaki’s Rich Dad, Poor Dad, I was determined to break the cycle.

Breakthrough Step-By-Step

That book was a huge eye-opener for me.

It struck a chord in my heart because I related to the experience of living paycheck to paycheck. I remembered the struggles that we had when I was child and I knew that I wanted to be rich.

Unfortunately, we grew up with the notion that one should study hard, so you can get a job after graduation. Later, you can get married, buy a house and retire after 30 years of working hard. You stay with one company all your life so you can get a good pension.

We were never taught financial literacy. We were never taught to build businesses or invest our money. We were taught to save for the rainy days but we were never taught to save and build an estate that would last for generations.

I’ve always wanted to get rich but the only way I knew to get rich is to look for a high-paying job.

When I got a high-paying job I still didn’t feel rich.

Reading RDPD redefined what it means to be rich. I found that being rich is not about the cash that you have in the bank or the income that you get every paycheck but it was about time. It was how long can you survive if you lost your job tommorow.

Wealth became measured in days or months instead of pesos or dollars. And I knew I wasn’t wealthy because I wouldn’t last 2 months if I lost my job. I knew I was deep in the rat race.

I learned that the key is passive income. If I had passive income greater than my expenses, then I would be able to survive and even thrive indefinitely even if I never get a job again. That was the big lesson I learned from Robert Kiyosaki and now I had a new target to work for.

There was just one problem.

I didn’t know if what Robert said could be applied in the Philippines.

Could you really buy houses with little or no downpayment? Could I really set up my own corporation? Are there opportunities to make passive income and make money work for me?

It was a brand new world and I started to search for groups that played Cashflow 101, the game described in RDPD. That journey is a story in itself and one of the results is I met the man who would later become my mentor through the game. He would also later become a bestselling author – Dr. Larry Gamboa.

At that time, he was not yet a bestselling author or a real estate investor. In fact, he hasn’t written any books yet or bought a real estate investment.

He was just a guy like me who believed in Rich Dad, Poor Dad and was searching for a way to apply it in the Philippine setting.

I met Larry around 2002. I was one of the people who taught him how to play Cashflow 101. He invited me to take a leadership training program and that’s where we cemented our friendship.

A few months after taking the leadership training, I met Larry again.

“Hey, Mr. Ronald. Good to see you again!” said Larry.

“Good to see you, too, Sir Larry! How are you? How is your Cashflow journey?” I said.

“Well, I just bought a 5-door apartment in San Pedro, Laguna. I only paid Php20,000 pesos in cash to control the property. I spent a few thousand pesos to have it repaired but I was able to quickly resell all 5 units in 1 month.”

My jaw dropped. After I fixed my jaw, I asked, “How did you do that? Can you teach me?”

“Of course! If you can go to Powerbooks in Arnaiz Ave on Tuesday, I’ll show you how I did it.”

Of course, I showed up. Good thing I did because some other guys showed up presenting a deal with 90+% ROI.

Wow, they do exist in real life!

Seeing those deals made me hope that I can do it too. So I started to hunt for good deals from bank-foreclosed properties.

Every week on a Wednesday, our small group of real estate investors would meet in Powerbooks and later Charter House.

We’d look at properties on weekends. On Wednesdays, we would play Cashflow 101 and present deals.

If something was good, interested investors would pool money to make the deal happen. If not, you’d just need to go out and hunt again.

Since I did not have cash to invest, I invested my time and money on looking at properties, learning the ins and outs of real estate investing and developing a network of friends who could help me out later when I found a good deal.

The search took a long time.

Weekend after weekend, I would pore over bank-foreclosed listings and newspaper ads, looking for a promising property and visiting them every weekend. I would take pictures, make estimates and push the numbers. If I think it looks good, I would present on Wednesday.

I looked at a property in Canumay, Malabon where the property was so run down only the walls were left.

I looked at a property in Karuhatan, Valenzuela but the wooden apartment had a convoluted design, I couldn’t make sense how I could subdivide and sell it. The seller screamed over the phone that he needed to sell the property but I just couldn’t buy it.

I tried to look at a property in Dela Paz, Marikina. I didn’t find it because I had to go through a dark alley to get through the property. The alley was passable only to people. I don’t think even a motorcycle could fit in. So I decided not to bother.

I went all the way to Tagapo, Sta. Rosa where we looked at foreclosed houses whose developer ran away from his buyers. He mortgaged the whole subdivision and didn’t pay off the mortgage. Some owners are still angry at that developer when we got there although they’ve been able to get their titles from the bank.

I went all the way north to Malinta, Valenzuela looking at a 16-door apartment in an industrial compound near factories and warehouses.

I almost bought an 8-door apartment in Galas, Quezon City but it wasn’t clear who the owner of the property was. It was supposed to be foreclosed already but the owner still had control. It was probably under the 1-year redemption period but I didn’t know about it at that time. Amazingly, the foreclosed owner dilly-dallied on the price and I just got fed up with negotiating with him.

It was property after property, challenge after challenge, week in and week out. I was getting discouraged, depressed and desperate to find my first deal.

Until, one day I chanced upon a 6-door townhouse in Alabang from a bank-foreclosed listing. I finally found a diamond in the rough!

I’ll share more about this property later in the book but that deal catapulted us deep into the rabbit hole.

We bought the property for Php3.5M then sold it for Php5.4M via rent-to-own. Up to this day, that property is giving us passive income and we can still enjoy a couple of years of passive income before we turn it over completely to the tenant-buyers.

That project has since given us 32.6% ROI since 2005. It’s a cash machine for me and my investors.

More importantly, I proved to myself that the deals described in RDPD can be done in the Philippines.

I raised money for that deal and I just needed 2 years to return the investment to our investors. It was a great deal and the numbers proved it.

There lies the big difference with my officemate, Ernie.

Ernie had to work years to save up money to be able to buy his lot and he has to wait many more years for who knows how long before he gets his investment back and make a profit.

That deal proved to me that you don’t need to have your own cash to make deals. You can make deals while saving up your cash!

I share this not to brag or to bring down my office mate. I respect him a lot because he was able to save a significant amount of money even with a salary as low as ours.

I share this to show you that there is no excuse to not get started to invest in real estate.

To be honest, it breaks my heart. If he only knew how to execute my strategy, he would not have had to risk his life savings on an investment without knowing when he’ll get it back.

If he only knew what I knew, he would have multiplied his savings many times over rather than leave it sitting in idle land.

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Hi, I’m Crosby Jeffler. This blog will discuss my methods for creating multiple income streams. I generated over $2M of sales in the past two years, and I’ll share how I did it.