5. Dumping the Dead Wood

It was time to stand back, appraise and admit the folly of the three bad choices. No sooner did a tenant move in than he was looking for another place. Only a fool would persist and beat his brains against a stone wall by trying to make the public accept what it didn't want. So I set about un­loading the bad ones. I advertised. I talked them up. I passed the word around. Soon this produced results. Others wanted to own income-producing real estate, and had not learned the lesson that still had my head spinning. Mind you, these were depression times. The amount of ready cash was the all-im­portant point in all business. So I tried to make the things at­tractive by small down payments. This worked fine. By the way, in the intervening years nothing has happened to change my mind about this as a wonderful method in selling real estate— particularly real estate that is otherwise hard to sell.

In talking to one (we'll call him) Farrow, I said, "I've got one piece of real estate that I'll sell for a ten-cent cigar!" Mr. Farrow was a bit of a wise guy. He thought he had me caught in a legally binding offer. He pressed his point. "Where?" I answered, "The brick house at 114 Brook Street." Quickly he took me up on it. "OK. It's a deal. I'll take it," and he smirked in his triumph.

So we sat ourselves down and made a contract! Right then andthere. For and in consideration of one ten-cent cigar. I actually sold all my right, title and interest in and to the real estate situated at 114 Brook Street, Brookline, Mass.—a brick 3-family house, occupied by 3 tenants, for one ten-cent cigar. Believe it or not, to this day I firmly believe I stuck him. He took over the mortgage, signed up on a new note, handed me the cigar (which I still have framed, as a reminder of what NOT to do in Real Estate) and he marched down to the build­ing and informed the tenants that he was the new owner and would be around the first of the month for the rent. He got a bit of a surprise.

The tenants had news for him. They gave him notice that by the first of the next month they would move out! This fazed him only a little. He had so little invested that it still didn't seem possible that he had taken on a loser. But he learned. In the ensuing years, while he hung on trying to make the public ac­cept something it didn't want, he learned something that I had paid heavily to learn. I heard he was trying to sell it from time to time, and then lost track of the whole painful affair. By the way, I don't smoke.

It was time to push the unloading of the other boner—The Pond Avenue-Villa Lane Group. To anyone who had not learned his elementary lesson, the figures were mighty attrac­tive. They were so attractive that you could easily overlook the slummy location. And I finally found a customer who did. Here again the allure of a low down payment—really a token amount —sold the property. The idea of owning an 18-apartment unit in Brookline, Mass, (a highly desirable residential town) with only $1000 down was too much for Mr. J. He beat the down payment figure from $1000 to $500, and I let him win. He as­sumed the old mortgage of some $7,700 and signed a second mortgage to me of $500, which he eked out in time and paid off.

When I had finally gotten rid of these properties, I licked my wounds and contemplated the future. The depression had brought business to new lows, and then established even lower lows. Still, people had to have shelter. Many who owned prop­erties in the deluxe class (for those times) were suffering.

Their $75 and $100-a-month tenants had moved into my $30 and $40 flats. The deluxe apartments stood vacant, and these va­cancies brought attendant worries. In order to keep from losing the building to the mortgagee, they HAD to have rental income to keep up the payments, or at least pay enough to forestall foreclosure. So the owners started to improvise inducements to get tenants to move into their buildings. You would see ads offering "free rent for 6 months" or "will pay your moving costs" and the like. Even without saying so, it was assumed the owner would completely redecorate. That was standard in the de­mands of new tenants. Of course these measures imposed new burdens of themselves. It cost a substantial amount of money to redecorate an apartment throughout. Things got so bad among the big owners that they were driven, in this and many other localities, to form associations. The prime purpose of these was to agree among themselves to abandon the practices that were pyramiding with each owner trying to outbid the other until it became absurd. To some extent these measures worked, but it fell far short of solving the problem for many.

However, these troubles never brushed me. I owned what the public wanted. I offered the public the shelter at a price it could afford to pay and a location it wanted to live in. As soon as I learned a few more lessons in management (which we will discuss later), I reduced vacancies and bad debts to less than 3 per cent of the gross! This was not only unheard of, but unthinkable in those days, and still is, in the trade generally. But it is perfectly possible for any other to achieve this fine record if he knows: What to buy (and what to stay away from), Where to buy, How to finance, How to manage.

You will learn these things well in this book.

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