Kendra Todd - Risk & Grow Rich: How to Make Millions in Real Estate

Im on a flight back to my beloved South Florida, but I cant help thinking about the rust-red Spring Mountains topped by Mt. Charleston, drier air than I had ever imagined, endless sunrises, and nights illuminated by a billion neon lights. Im talking, of course, about Las Vegas. Or as younger people, influenced by the film Swingers, love to say, Vegas, baby!

My first trip to Las Vegas was a revelation. Not because of the gambling or the entertainment; I had seen plenty of both in my time. But because of the incredible growth of the area and what it meant to someone who made his living as I did, by locating outstanding real estate investments for my clients and for myself. What I saw in Las Vegas was a new, wild frontier, a place that had turned itself into a colossal travel destination and was now on its way to reinventing itself as the worlds new resort megacity, a Miami Beach under the blazing sun of the Nevada desert. The citys defiance of conventional wisdom about growth and its seemingly unlimited potential make it the perfect emblem of one of the most important principles in wealth building: you must go where the market is.

I bring up this story because in Risk & Grow Rich, Kendra and I are going to share with you what we have learned about leveraging risk to create wealth from our personal real estate investment experiences and from our work with our company, MyHouseRE.com. Started in 2000, My HouseRE.com is also in the business of defying conventional wisdom by helping real estate investors find shortcuts to wealth by buying condominium conversions and preconstruction condos in areas with strong fundamentals that are likely to appreciate greatly in the future. But what we really do is educate our clients. I like to say we defy the old maxim that real estate is about location, location, location. I say its about education, education, education. How can you know if a location is right unless youve learned about the area, the economy, proposed future development, and population trends? You cant. Education enables you to take smart risks that look crazy to people who dont have the same information. Its information that has led Kendra and me to expand our business to where the market is, namely, the West.

Believe me, there are no bigger South Florida boosters than the two of us. Its a wonderful place to live and the real estate market here creates opportunities to build wealth everywhere you look. But whats happening in the West, especially in Las Vegas, is nothing short of unbelievable. Here are a few of the statistics:

• According to the Las Vegas Chamber of Commerce, the city is the fastest growing in the United States, with an estimated two acres of land developed every twenty-four hours and 6,000 people every month moving to the city permanently.
• According to the Boston Globe, since 2000, the median price of a new home in Las Vegas (excluding condo conversions) has more than doubled, from $161,893 to $335,091.
• As of late 2005, a total of ninety-three luxury condominium projects, with 194 towers and 51,000 housing units, had been proposed or were being built, says Brian Gordon of Applied Analysis, a Las Vegas research firm.
• The South Strip is booming at an unprecedented rate, with huge projects like the luxury condominium/casino project Las Ramblas, backed in part by actor George Clooney, poised to change the landscape of the city.

These ultra-swank luxury townhomes and condos are not for the hourly wage workers of the casinos. They are meant for wealthy regular visitors, retirees who want second homesand investors like you. There is no place else in the country where you can find preconstruction or conversion real estate at price points that offer such value with such promise of appreciation. All the signs point to Las Vegass continuing to grow and the South Strip and the well-known Strip meeting, like the two halves of the Transcontinental Railroad, in four to six years. When that happens, investors with the foresight to buy early should see exceptional profits.

The point of all this, other than to clue you into a wonderful real estate market, is to illustrate that making your first million by the time you turn fortyor beforemeans having the vision to recognize emerging markets early and taking the risk of moving into them before they have been proved safe by others. Waiting until a market is safe inevitably means that the price goes up and your return on investment, or ROI, goes down. Youve got to educate yourself, learn the telltale signs of a boom in the making, and then act quickly with a system in mind. Thats what we do at My HouseRE.com. Kendra and I understand that you cant create a market; you can only recognize it and take advantage of it before others do.

Of course, Bugsy Siegel was an exception to this rule; he created the market because it didnt exist. He wasnt the first person to look out at the desert of southern Nevada and see a tourism paradise of gaming, liquor, and sex; he was just the first one to recognize that Nevadas legalization of gambling gave it the potential to be the adult playground that the postWorld War II generation would line up for. Bugsy found a partner and created The Flamingo, the first of what would become hundreds of garish, exciting resorts that would turn that barren stretch of wasteland into Sin City.

Siegel created the market, but it was a market that, to this day, makes its own rules. Most cities have to worry about where the resources are coming from before they can grow at even a moderate pace. Not Las Vegas. The attitude there is that growth is good, and the bulldozers are leveling land and laying infrastructure before anyones sure where the water will come from. The normal rules dont seem to apply. The architecture is wild and fanciful, the laws arelets say relaxed, and the sheer volume of people streaming into the city to make their fortunes can leave you feeling overwhelmed. Its not much different in other sunny playgrounds of the West. Arizona, particularly the areas around Yuma and Scottsdale, continue to experience its own boom, with U.S. Census Bureau data predicting 3.1 million more people in the state by 2020. Liberal Austin, Texas, home of the late Stevie Ray Vaughan and Dell Computer, saw its population grow 48 percent between 1990 and 2000, according to the Census Bureau. Even in southern California, one of the most expensive markets in the country, there are opportunities if you know where to look. Everybody wants to be where the weather is warm and the humidity is low.

You have to be prepared to jump and go where the market is. This may not mean hitting the road for another city; were planning to open an office in Las Vegas but not actually move there. But it can mean a physical move, or it can just mean putting forth the resources to compete in a new marketresearch, marketing, salespeople, networking. You cant control a market, but you can control your response to one. Thats what weve done in responding to the incredible potential of Las Vegas. We could have stayed in South Florida and Orlando and been very profitable, but instead weve chosen to risk by adding the West to our portfolio, and thats going to make us and our clients very rich.

Its important to add that even though you move into a new market, you shouldnt change the way you do business. I am neither a gambler nor a cowboy. Nor is Kendra. Everything we do and teach our clients is methodical and strategic, and that hasnt changed because were part of the new Gold Rush taking place on Las Vegas Boulevard. Its tempting. But its vital that you stick with your fundamentals and do business your way, in a way that reduces your risk and keeps you from becoming stressed and discouraged. In Vegas, you can throw a stone in any direction and hit a guy offering you a cant-miss deal that represents an unhealthy risk. Some would jump at that deal; we dont. We have a formula and we stick to it. In the last chapter, well share that formula with you.