By Dan Zitofsky, Entrepreneur
"It's not how much money you make, but
how much money you keep, how hard it works for you, and
how many generations you keep it for." - Robert Kiyosaki
While all the other kids were spending their birthday money on games and candy, I was the kid who turned my monetary presents over to my grandfather, with only a small portion handed back to buy a toy or sweets. Sacrificing the instant gratification and sweet tooth to the greater prospect of more in the future through investment was one of the greatest lessons my grandfather taught me.
As a furrier in Europe, my grandfather came to America with $500 and the belief that acquiring and selling multi-family land could secure finances for his family. And thank God he did. It was because he owned a small compound of noncommercial real estate that he was able to retire early and care for my 90-year-old grandmother. It has been twenty years since he passed away but it seems like just yesterday I was handing over my birthday money.
My inspiration then and now, I too have found success in real estate by investing in emerging markets for myself and our clients, making it possible to step out of the rat race earlier and be able to spend time with those I love. My story is not far off from my grandfathers. At 18 years old, I entered the Navy and took all that saved birthday money and purchased my first condo. All the sweet tooth sacrifices finally paid off with a nice townhome to show for it.
It was exciting to learn that I could make money through time and investment, and it worked out very well at that. I was collecting rent, making more in passive income then I did during my first year of service. Living what I learned earlier in life, I stayed at the barracks when my peers were out partying, saving my pay in order to purchase more property.
Doubling my passive income, which far outweighed my $250 bi-weekly service pay, I honestly had more money than I knew what to do with. After leaving the service and joining the NYPD, I found the force was somewhat similar to the military. Starting at $27,000 per year with no hope of capping out at more than $50,000 in five years, I knew I wanted more for my wife and baby daughter.
I refused to have my daughter raised by someone else so I took up a couple more jobs so I could make and invest more money. I was fortunate enough while being a lender to come across many properties from sellers who had no chance of fixing or saving their property. Transforming old into new was a gift given me, and I was taking full advantage of the blessing. However, with wealth came some hard lessons, and at 24-years-old, I learned way more than I wanted to, but found it to be a very necessary evil in business.
As the local go-to guy for pocket listings and REO’s (real estate owned) , I was doing for others what I was doing for myself, again, just like my grandfather. I learned I liked passive income and started helping other investors by lending them money on properties I would consider buying myself. Pre-Google and Staples, I spent hours researching and putting together resume packets and sample investment portfolios for my projects, with spreadsheets and 35-millimeter camera pictures.
To my surprise, I started receiving phone calls from people I never met asking if they could partner with me. I had more money than properties. I only wish my grandfather was alive at this time to guide me. I had more than 2 million dollars pledged to me and had no idea what to do with it. I was in my mid 20’s and risking my life in the dark streets of New York as an officer for under $30,000 per year and here are investors pledging all this money to me. Needless to say I was frightened.
Taking the risk, I remained extremely conservative and always paid my investors before receiving a salary. My biggest problem became my investors being upset with me when I had to pay them after the close of a deal since they said they loved being involved in my projects. While I was making this honest and hard-working living, the NYPD questioned my integrity and brought Internal Affairs in to perform an investigation since there was no reasonable way a rookie officer should be living the way my family was.
They were dumbfounded, but most of all, envious, wanting to know how I was doing it. All I was doing was applying common sense and the lesson my grandfather taught me. Building my own team, I was extremely busy and two years in a row was rated among the top 100 mortgage brokers in New York City. By 2000, I opened up my 2nd brokerage. Everything stopped on September 11, 2001, when I became a 1st responder in 9/11 on the Staten Island Task Force.
From that day on, I learned what was really important and decided to take control of my own life. I knew I was destined to get off the police force, and much sooner than later, and I was able to vest out in May of 2002. When I left the force, my mortgage brokerage business went through the roof. Once again, instead of spending millions of dollars on cars, boats, jewelry and vacations, I took those profits and studied the emerging markets in Arizona and Las Vegas. Called “nuts, crazy and stupid,” my Popeye-inspired reply was always “I am who I am.”
I learned early on that when I bought up a ton of raw land, it’s best to go apply and become approved with all permits so you could present a contract that’s ready to build. Here I was in my 20’s and I am meeting with high-end builders and presenting fully approved land to them. They loved it and so did I; however there was a caveat. I optioned the contracts to them and they had to sell me one property back in each sub division.
Why did I do that? To create my own supply and demand. And it worked under the rule that only 10 percent of the property in a sub division can be non-owner occupied. Guess how many houses were in each subdivision? Ten. Guess who locked up the 10 percent? My team. After owning more than 15 ourselves, we partnered up with a realtor. Of course I signed up with a net branch to do mortgages in Arizona and this is when I started doing seminars around the country with a minimum of 25 qualified investors. We had deposits for every house and a waiting list. Not so crazy now, the ones who ridiculed me begged me to get involved and I allowed them in, since that was my grandfather would have done. I started buying properties up all over Trenton, New Jersey and Philadelphia for the next few years. We would fix-and-flip or sell turnkey rentals in the tri-state like nobody’s business.
While doing all this, I was able to consistently lend my money as well to those seeking to do the same. Being able to help others solidify a financial future the way my grandfather did for me was satisfying to say the least. As CEO’s, farmers, trust fund financiers and IRA holders sought my assistance, I was able to teach them how to invest their funds so that they too could make the most of their hard earned salaries. Asked to speak at invite-only seminars around the country, I taught the art of creating wealth passively while simultaneously raising money.
Also a REI coach for four years, I have guided investors on the how-to’s of real estate investment and finance. Be it my military or NYPD experience or simply my do-or-die East Coast survival attitude, when I coach I expect a lot from my students. I expect a return and I don’t just mean money. I want to see future generations give back just like my grandfather.
In an age where investment is a matter of timing, my investors must be ready and approved. With their due diligence, I too am ready to give the answer and will not take money from possible clients if I don’t see a fit. Over my career, I have owned over 800 rental properties, fixed and flipped more than 400 full retail properties and lent on more than 300 deals. I’ve acquired everything from 1-4 family homes, land, commercial buildings, hotels and my new found favorite, multi-family buildings in emerging markets.
These new markets make it possible to significantly increase property value with some basic improvements and have proven time and again to profit both my partners and I. My passion is creating residual passive income from real estate and mortgage notes and educating my children on the same. Like my grandfather mentored me, I too have educated and encouraged my son to enter the business. Taking me up on my offer, we run 302 Wholesale out of Delaware while he is also an apprentice with one of the state’s largest developers.
I am teaching him the art of taking people who, within a year or two, are making more than what they are making at work and are able to sit on a beach. As far as what suit to put on, well it is a choice of which bathing suit to wear and not what business suit and tie to put on for the next meeting.
Like me, “Do they have to work? No,” Through IRAs, notes, partnership deals and multiple family housing, it is possible for clients and future investors to take control of their own destiny rather than give it away to another. There is construction coming in, buildings going up and stadiums being built that create the need for housing. This growth creates new employment opportunities to blue-collar workers all over the country. There are dozens of demographics with low crime and great schooling. I have a good team behind me and I am good at building organizations and strategies. My team partners with special groups, we invest in multi-family buildings, we wholesale some properties and we do land acquisitions. We bring investors to multiple properties and are taking that from the tri-state to nationwide.
Speaking at high-network events and training other qualified investors how to build their retirement portfolio through partnering on these deals and building their own turnkey rental portfolios helps stop the struggle in life. A lot of people have no place to retire and they don’t know what to do. They are making no money and/or losing money while barely getting above the poverty level.
I understand this personally on so many levels and am actively working with clients to build a solid rental portfolio and take control of their destinies. It’s about how to get out of that job and get control of your life by investing wisely for the future. There are so many things we talk about: we talk about how to live, get out of the rat race and to set up a future to be there for others the way my grandfather ensured he could do for my grandmother, which brings me back to the beginning of the story.
My parents didn’t make the impact my grandfather did for me when it came to taking power and control over my money, and future. I’m want to pass that on. I use my kid’s money in every deal and they earn a percentage depending on how much they invest. They love it and it’s great to beat the amount they earn working by earning them passive income. And I do the same for my clients. By investing funds into emerging markets, like my grandfather, I am able to help create a future savings rather than a present good time. Thank you grandfather.
One of the hardest things for any entrepreneur to do is just get started. A big issue I see when coaching or speaking in groups is paralysis by analysis. You need to treat anything you do as a business. I always sit down with investors and work backwards in goal planning.
1) Figure out What your ultimate goal is.
2) How many deals do you need to reach that goal?
3) How much time you have to reach that goal?
4) What do you need in money, contacts, team and knowledge to reach that goal?
Most investors think it’s a get rich scheme and it's why so many speakers like myself sell products. I haven’t sold anything other than coaching, because my goal is for you to get started with a plan and stick to it. If you think of being an entrepreneur as a hobby, that’s exactly what it will be. If you treat this as a business, that’s the results you’ll get. I sometimes get asked how hard or how many hours I work in a week. My answer has always and will always be, I will work as hard as I can for the next 3-5 years so I can live the way I want for the rest of my life.
ABOUT THE WRITER
Dan Zitofsky is the owner of 302wholesale.com, along with his son, Jonathan. Together they...
- Help homeowners that are in trouble to get out from under their homes.
- Help investors find properties at wholesale prices.
- Over 300 successful transactions.
- Funded over 140 Private Money Deals for investors to complete their purchase and rehab projects.
- Referring homeowners and property buyers to mortgage companies and private lenders.
Dan and Jonathan have partnered up so that Dan could teach a young man the value of a dollar and hard work. They're a father and son team working to help families when they are having issues selling their homes because of foreclosure, loss of job, repairs, death in the family, relocation, etc.