The Norris Group’s Legacy Series is interviews with I Survived Real Estate Rohny Award winners. Next up in the 2020 series is real estate mentor and educator Peter Fortunato. The Rohny Award is given every year to a real estate educator or mentor that has impacted the real estate investment market and many careers along the way.
Peter is a libertarian and a capitalist. He believes that transactions which you can be proud of result from carefully conceived goals and plans followed by purposeful actions and scrupulous documentation.
Upon graduating from high school in 1965, Peter went right into the real estate business. His motivation was his desire to be self-employed until he could afford to be unemployed. Pete says “Everyone who knew me believed that I was unemployable. They were right. I still am!” Peter was excited about being free to build his business and his future. He attended seminars and read at every opportunity. He sought out and learned from many mentors and benefited from the example and counsel of his father who always encouraged and supported him. Pete finished college with a clientele and an investment portfolio.
By 1975 his investment income had eliminated his need for fees from clients to fund his lifestyle. Peter continues to teach and to attend real estate and investment seminars and meetings regularly. He is respected for his clear and patient explanations of investment concepts and transactions. He has been building, structuring, manipulating and managing investment transactions and portfolios for more than 45 years.
Bruce and Peter talk about how he got started in real estate, how he started teaching and why he considers himself a capitalist.
- How did Peter get started in real estate and teaching
- Why Peter says he is unemployable
- Libertarian vs. Anarchist
- People who influenced him
- The Golden Rule is a terrible rule
Narrator This is the Norris group’s real estate investor radio show, the award winning show dedicated to thought leaders shaping the real estate industry and local experts revealing their insider tips to succeed in an ever changing real estate market hosted by author, investor and hard money lender, Bruce Norris.
Joey Romero Hey everyone, Joey Romero back again with our I Survived Real Estate legacy series. The vibe real estate legacy series is our series of interviews with Rohny award recipients. The Roni award is given out every year at I spy real estate to an educator or mentor that has impacted the real estate investor market and individual investors along the way. Hope you enjoy.
Bruce Norris Hi, thank you for joining us. My name is Bruce Norris. Our special guest today is Peter Fortunato. The roadie award was created because a man named Jim Rohn changed my life in three hours one night 1980 and centered in a completely different direction. Peter Fortunato received the Roni award to recognize his contribution to the real estate investment business and the many lives who he says he’s changed because Peter took the time to teach what he knew to others. Peter is a libertarian and a capitalist. He believes that transactions he believes the transactions which you can be proud of result from carefully conceived goals and plans, followed by purposeful actions and scrupulous documentation. Upon graduating from high school in 1965, Peter went right into the real estate business. His motivation was his self, his desire to be self employed, until he could afford to be unemployed. Peter says everyone who knew me believed that I was unemployable. They were right, I still am. Peter was excited about being free to build his business and his future. He attended seminars and read at every opportunity, he sought out and learn from many mentors and benefited from the examples and counsel of his father, who always encouraged and supports him. Peter finished college with a clientele and investment portfolio and by 1975, his investment income had eliminated its need for fees from clients to fund his lifestyle. Peter continues to teach and to attend real estate and investment seminars and meetings regularly is respected for his clear and patient explanations of investment concepts and transactions. He’s been building, structuring, manip, manipulating, and managing investment transactions and portfolios for for more than 45 years. And Peter, we welcome to you to our show. It’s a pleasure.
Peter Fortunato 02:30
I’m looking forward to the talk.
Bruce Norris Can you define unemployable for me?
Peter Fortunato I always know that I have a better idea than the person who thought that they were in authority. And I have no self discipline. So I’m going to try to help whether they like it or not
Bruce Norris So you were like the class, the teachers worst nightmare in school?
Peter Fortunato Well, in school wasn’t so bad. I just bring a good book and sit and read the book and ignore them.
Bruce Norris Okay. All right. Now, when you were growing up, and I asked this of a lot of people who I interviewed that are really entrepreneurial where you were when you were in like grade school, did you do anything that was entrepreneurial? Did you have a side hustle of some kind?
Peter Fortunato Yes. What did you do I could do to make money. I mean, I used to organize people to mow lawns, and then I would collect and make the connection. And my my brother and I used to just die for a snowstorm. So we get run out and shovel snow. But essentially, I was a capitalist, and my goal was to get some capital, so I didn’t have to do any work.
Bruce Norris Where did that come from?
Peter Fortunato I was lucky enough to be born into a family where no one would ever work for anybody.
Bruce Norris Wow, I, I’m going to tell you a story because you’re going to relate to this so much. My best friend Alex is Cuban and always worked for himself. And he raised his son to be that way. So when his son to about 13 years old, Alex tells him you know, when you’re 16 you probably want a car instead to get a car you’re gonna have to, you’re gonna have to earn the money. And so, he said, I’ll tell you what, I’ll buy you a lawn mower, but you pay me back. So there wasn’t it wasn’t a gift. And he thought he would David would go and mow lawns. Well, David went and got the account but never mowed a lawn in his life. He got 50 he got 50 lots. And you know the rest of the story and his dad was wondering why he’s doing so well and had so much time on his hands. But that came in bread somehow. I don’t know that that’s as teachable as it is. If you got it. You got it.
Peter Fortunato No, I spoke to a third grade in New York City. Probably 95. And I always ask kids, do you like money? Where do you get it. And I’m very sad that they all talk about it, get it from work. And that’s a terrible thing to teach kids. Because if they sentence themselves to working for money, instead of understanding that they can acquire assets to produce money and become a capitalist, enjoy their life and be free to do what they want, then they’ll always be stuck in the trap of a job. And so I asked this class, and we went around the class and they mowed lawns, they wash windows, they did work around the house. And then this one little girl said, Well, Mr. Fortune, oh, I make money by telling my brother, that if he’ll pay me $5 I won’t tell our parents why he did. And so she was an extortionist. But at least she wasn’t going to be a wage slave.
Bruce Norris That’s, that’s funny.
Peter Fortunato But that’s a young kid.
Bruce Norris That’s a young kid does come up with that one. Yes. You know, I didn’t get involved in till about 19 8081 in real estate. So I mean, you’re you had 15 years, you started really young. So why, and this is what’s interesting to me. We approached real estate so differently. And I’ve always been fascinated, and you’re one of those people. There’s only a couple people on this list that I have to listen to about two or three times to even get my arms around, what the heck, where your brain has just taken this stuff. And that’s it. That’s pretty cool. Because I’ve done a few transactions. But I think maybe how you get introduced to the business, I got into the boot the business by having to get price reductions to make to make money. That was the only program I was taught by this at 65 cents on the dollar, and you earned this. And that’s my introduction, your way of thinking is completely different, completely.
Peter Fortunato Right? Because I’m not buying it to resell it. I’m exactly benefits to keep for the rest of my life. I’m acquiring benefits that are left over from other people who don’t need those benefits. For example, when I was earning $4,000, a year, my first year in real estate, I didn’t have any trouble giving away the tax benefits to somebody because I had very little use. grossing $4,000.
Bruce Norris But where do you come up with the concept? You can give them away? I mean, No, you didn’t give them away?
Peter Fortunato Could you do you some of the houses made of? It’s made of profit? income, tax benefits, amortization, appreciation, the thrill of management, the joy of using it, those are all different pieces you distribute to different people.
Bruce Norris I think you invented that didn’t you?
Peter Fortunato No, when I was 18 years and 11 months old, I did my very first presentation for free in our real estate office slash basement playroom. Okay. And it was a free presentation of 10 minutes on each of those topics.
Bruce Norris Okay, but I mean
Peter Fortunato investing for growth, I talked about cash flow, I talked about enjoying a house, and I did 10 minutes, it was an hour, it was easy to do when you were 19 years old. I got some questions. And as a result of that talk, I ended up with two out of the 10 people who came to hear me, I end up with two customers.
Bruce Norris But the concepts that you shared, they originated with you or somebody that you know, the old I have to be honest with you. I you know, until I sat and listen to you speak. When I got asked to speak in Florida, I really didn’t want to do it. But I said I’ll tell you what, if you could get Pete to share the day, I’d love to teach with him. Well, I was you know, I was one of the students in that classroom that day for sure. Because all the stuff you were you were covering, I hadn’t heard before. And that’s so you know, that wasn’t all that long ago. So then you you’ve seen a whole different real estate world and I have I’ve done a lot of transactions but probably missed. I don’t know how many because I only had one tool.
Peter Fortunato Yeah, but see, I missed the chance to buy a house at that big discount and resell it. We do the things we’re comfortable with and we enjoy. I mean the problem I would have had is I have this religious thing about taxes. I wouldn’t be able to resell it if it was a profit.
Bruce Norris Well, I’m starting to get your religion as I have now moved to Florida. You want what’s one of the things that I really have missed in the last Gosh, what year are we at? It’s almost Yeah, it’s 15 years is a probably 90% of what I bought from 80 to 2005 was talking to a human being that owned it. After that, the model changed. And we bought from courthouse steps, and Oreos are built houses. So it’s been a very different model. But I used to really enjoy the conversations with people. And I really feel like we have a kindred spirit in the sense that our, our first intention is to clearly understand the situation. And if there’s something that I can do to help, that even doesn’t include me to make a profit, I was cool with that. And I would sometimes buy houses. Because of that, I would suggest things, and the people on the other side are going, you run an ad that you buy houses, and you’re telling me every way to prevent that I said, you’re going to buy it or not, like oh my gosh, so but that it gives you a clean, feel like a clean conscious and actually an enjoyable day. And I don’t I don’t know how many customers really get it. That for them to talk to you about their real estate problem. What happens is you have 10,000 conversations, to invest in this conversation because of your experience. They’re not gonna find that anywhere else, then that’s that’s the one of the coolest things.
Peter Fortunato But it all begins if you want to be a capitalist, if you want to be a leader, you have to care about other people. And so it begins with Karen, well, something’s changed in their life, or else the house wouldn’t be available. They got a job out of state. Here, I find people who’ve been told they couldn’t handle stairs any longer. They had twins. The kids went off to college. I’ve had people call me and say, I need to get out of this house. Well, why? Well, the kids are talking about coming back to live with me. If we can get a one bedroom condo, we could say we’re so we’d love to have you. But you’d never know. You have no idea. I have no idea when I talk to someone what is going to be that problem. But my job is to care enough to find out what’s going on and see if I can enable them to be better off not it’s rare that I get perfection or anything close to it. But I can structure something that’s more comfortable for them. And so it’s very rare that I would ever buy something and give people money.
Bruce Norris God forbid.
Peter Fortunato because money is not what anybody wants.
Bruce Norris I I absolutely have. You know, when I heard you say that first I was sort of like, okay, I don’t get that one. But I’m starting to get it. I understand what you’re saying. Especially since it pays nothing.
Peter Fortunato No one pays nothing. If you can’t trade it for something else. its highest and best use is toilet paper. It’s only it’s exchangeability. The dollar is a conduit from something they don’t like to something I like more. That’s all it is.
Bruce Norris When you when you have conversations in 2020 are they typically a referral of some sort that got them to you? Or is it from scratch? And they don’t know you from Adam?
Peter Fortunato Almost everything I do is repeat and referral business.
Bruce Norris Okay. Which is, I mean, that’s a big help, because let’s say now that group of people I use Bruce, of course, yeah, there’s gonna be a lot of repeat. But in a way that’s that’s a great thing. You not only have you earned the right but there’s a trust factor on both sides of the table.
Peter Fortunato Exactly. The easier for me with someone’s referred me there, or I’ve done this one before and rapport is the foundation of a deal.
Bruce Norris Yeah. And I I’ve had, I haven’t had as many transactions with people repetitively as you. But I remember the seventh house I bought from somebody. She called me up, she’s she she had a life situation change. He was going to move her mother back to North Carolina. And so she wanted me to buy her home or mother’s home. So I went to meet her. And I had my my list of comps. And I and I told her I said, you know, if I have to write a check for it, I can pay you this, but why don’t you just carry the paper, you know, I’m trustworthy, I can pay you more. And then and then she you know what she says to me, and this was this was where like a light bulb went on? She said, Bruce, you sure that’s a good enough price for you? And I realized, wow, we’re both looking out for each other here. What that just made me feel really good about the transaction.
Peter Fortunato Yeah, yeah. My son made an offer to somebody last year that we’ve done other business before. He’s got a good relationship with them. And he offered to buy it and give him 5% rate on the seller carry. And the gentleman that was selling the house said, well, full work. I didn’t know what was the next step in my
Bruce Norris Didn’t didn’t take didn’t take that course. Well, you’ve earned the right to have that recollect that comment. When you’re when you’re teaching an audience. And let’s say this weekend, what percentage of those people are students already of yours? A great percentage? Everyone, everyone. Wow,
Peter Fortunato Everyone in my room is a family member or a referral from someone that I’ve been in class with before. That’s why my maximum method of marketing is, if God meant for them to be in the room, they’ll be there. And I don’t do any marketing.
Bruce Norris Okay, now what your teach when you teach people that are brand new, let’s say, I’m brand new. Yeah. I’m not going to have that easy conversation right off the bat, because there’s going to be a seller on the other side of the phone or the other side of the table, who might be suspicious of my motives. How do you how do you tell somebody to say a lay that to the for the seller?
Peter Fortunato First, I don’t ever advise people to go out in pursuit of sellers. I realize it him to go out in pursuit of allies.
Bruce Norris Okay,
Peter Fortunato good. What happens in my in my case, I went out in the neighborhoods where I wanted to own something. And I knocked on doors. Or if I was in that neighborhood, and I saw somebody out, mowing the lawn or washing a car, I stopped and talked to them. And I said, Hi, my name is Peter Fortunato. I’m looking for house in this neighborhood. How long have you lived here? And I’ll tell him if he says I’ve been there. 20 years. I said, Boy, but you’ve seen a lot of things change. I enjoy talk. I like people. Yeah, before I leave, I will say in the event that you have an extra house or you know, someone who has an extra house, will you have them call me or will you call me? They always say what’s, what’s an extra house?
Bruce Norris No, I get it.
Peter Fortunato No, but they don’t they I often get that question. Okay. I then write a note on a piece of paper on a three by five card and leave it with them. And weeks, months, years later, I get a phone call. Mary Toledo called and said, Gee, my my brother has had to go to nursing home. He’s not we’ll come back to his house. The neighbor said, you’re interested in buying a house. Are you still interested? I hadn’t been in that area for eight years. I bought that house.
Bruce Norris Yeah. That’s cool. I learned the definition of an extra house one day, when I had done a very small mailer in a in a neighborhood that I wanted to flip in. I had taken the time to go in front of all the houses pick the ones that needed the most work mailed them and offer not a Hello, I buy something. I mailed them an offer with a copy of their net check and the whole deal. I bought four houses out of 100 letters. But the one conversation I had was very interesting. I made I’m signing the deal on on the guy’s truck, hood. And it has it’s his residence. And he said, this house and that house are exactly the same model. I’m buying that one over down there for 34 grand because it’s an extra house. And while he’s signing the paperwork, he says you couldn’t buy this one for a dime less than 80 grand. So I’m buying that one for 50% or more discount because it’s an extra house to him. Yeah. And that’s that’s a great sentence that extra houses exactly and good.
Peter Fortunato When I’m going door to door I usually say excess house x as opposed to extra I was talking to you. Because excess gets more comments than does extra and I want to discuss with people I want the discussion I’m trying to discover and I’m trying to develop an ally. I’ve never had a sale that the ally I developed in that sale wasn’t more valuable than the property I bought or sold.
Bruce Norris Wow. That right there is a very important statement when you teach people for them to understand the repetitive nature that business can be. You don’t have to recreate the wheel constantly. If you in fact I’ve treated somebody right.
Peter Fortunato When Gary Johnston asked me to do a thing on relationships and wealth building in his convention. Vegas a couple years ago, yes. And I my presentation, the three one and a half hour presentations were about the 71 transactions I’ve done with four families. While I was doing I was doing the outline here in my house, and a friend of mine who’s got a we buy ugly houses franchise was sitting here. And we were talking about my outline and he says, gee, he said, I’ve done 503 transactions with 502 people. It sounds easier
Bruce Norris Yeah, I mean, that has to give him some pause and go, Well, wait a minute. That means I could have been 5000 houses. But again, I don’t think they have when you sit down with somebody. I don’t think you have any structure. Yet for the deal, because you have I don’t care.
Peter Fortunato I Don’t know what the discomfort is. My job is to resolve a problem. And so I mean, I’ve made wraparound loans so people could pay off credit cards, so they didn’t have to lose their house. I bought an option so that the widow could pay off her car, thereby increasing your income by 350 a month, so she had to sell her house. I’ve traded an older couple three bedroom, three, two bedroom, one bath houses. For one three bedroom, three bath waterfront house, houses two too much, they moved down to one, they still had three houses, they still had the inflation protection of rents rather than a note. I’ve done installment sales 100 times with people who had all cash offers but didn’t want to pay the taxes. I structured a deal not for me, because there’s a pool house. It wasn’t a house I would buy two weeks ago, the older couple older, younger than me in the early 70s. Were going to sell their house it was their residence. So it was Code Section 121 no tax. They are someone from their church and offered them $350,000. And they were on there they were each on Social Security. And when they called the bank, and they discovered that the bank was going to pay them $29 and 83 cents a month in interest on a third of a million dollars. They were surprised they thought a third of a million dollars lead to a better lifestyle. Right? Oh, I have one of my friends by the place from them. For $350,000 no money down 1500 a month for 30 years. And 1500 a month they liked a lot better than $29.
Bruce Norris That’s pretty cool. When when you teach with John Schaub, how do you divide the day? What category does john own and what category Do you own,
Peter Fortunato we do an hour and a half each. So I’ll back nine, nine to 1030. Then from 11 to 1230. JOHN will go on. I always when when we used to teach with Jack Miller, we would always fight to go second because after Jack when first our material was already there, we didn’t have to do any preparation. And john likes to go she he likes me to go first. But this weekend was extraordinary, because John’s big concern or focus is on deflation and hoarding dollars. And again, is on inflation and leveraging the lights out. I never expected to be 73 years old and leveraging as much as I can leverage.
Bruce Norris That was that was literally the question. One of the questions I had was you own stuff free and clear. Because that’s that’s been the goal and have it all free and clear. Not anymore. Wow. That’s a that’s a big difference. Now, you and john actually differ on the direction of what’s next. No, no. Okay,
Peter Fortunato go on. See there’s a deflation right now. Okay, for your fear people hoarding dollars, right? They’re putting in a cookie dough. They’re not spending them. So as a result, they’re not chasing goods and services. But the amount of money that has been created, you know, Ludwig Von Misa said government’s the only entity so powerful that it could destroy a valuable commodity like paper by applying ink. And now they can’t even afford the paper. So they’re doing it digitally. Right take that Excel spreadsheet down at the Fed and widened it say wow, more money. And see the benefit of being a counterfeiter is that you get to spend the money first while it has its greatest value. And so the government’s taking huge advantage of that now. So I’m looking at the inflation over the long term. And I have no doubt that is a deflation going on right now. Because a substantial number of people are hoarding money, either seeking opportunities or just frightened.
Bruce Norris Okay. All right. I’m not. I’m gonna play devil’s advocate just a little bit because I’m trying to figure this one out for myself, to be quite honest. Okay. Oh, are we okay? So demographics for the our country don’t really favor inflation. They favor deflation. When you have tech advances that favors deflation, that’s not inflation.
Peter Fortunato That’s right.
Bruce Norris So where’s this velocity going to come from? You can create money, but I don’t know that is it going to swap hands enough to make inflation?
Peter Fortunato Well, we are talking about two different kinds of inflation. The inflation that is the money supply has increased. Yeah, to a trillion, whatever. I mean, yeah, I don’t even know how to write it, except in English, because there’s so many zeros, I can’t even write the number, I have to say a trillion TRL. That’s just amazing. But I look at that those dollars are going to be spent in the future and their real value is very different than the nominal value. And I look back at my history. In 1965. I went to real estate business. And in 1965, I bumped into you and I said, Gee, Bruce, Could you lend me $1 and he lent me $1. And I was able to buy 21st class mailings. So I created a nice letter and I sent out the 21st class mailings, just like you were talking about mailings as a way to to market right now we meet today. I said, Gee, Bruce, I owe you $1. And I pay you back. I see, I’ve seen that in my life. And I think I see nothing but that for my kids and my grandkids, I want you to pay off debt, with rents, and with ever cheaper dollars.
Bruce Norris Okay, so
Peter Fortunato the dollars are there, they’re out there. They’re not going to contract the money supply.
Bruce Norris No, they’re they’ve increased the money supply a huge amount. But I’m trying to figure out if we have what do we have the ability to have velocity?
Peter Fortunato Well, that’s why I think that’s why they want to go away from the paper money. Okay, they want to use the credit card nonsense. Whatever they call it, the digital money with a card, the
Bruce Norris Bitcoin type stuff.
Peter Fortunato No, no, no. I mean, okay, government wants to control it to heaven forbid, Bitcoin used to be decentralized, and dealing with decentralized money would be a horror show for government. Right. But they want to start, they just began sending out the digital cards with the pretend to be monies. And here’s your $2,000 for the month of October. I mean, I just I heard that because I got a letter saying, Why did you come in for your $2,000 or 1200? dollars or whatever it is? All right. But see the digital money, what happens is it gives them control, lets them know where the money went. It enables them to put a trigger on.
Bruce Norris Correct.
Peter Fortunato They said this is the October card. So on November 1, it goes to zero and they gives them the ability to control the velocity of money. Okay. So for somebody like me, it’s just that sounds like so much fun. Because I would go to somebody who’s got the card who’s running out, and he’s not going to get any value for it, and tell him to go and buy things I want and give it to me. value and I’ll trade him something.
Bruce Norris Yeah. Are your courses and they’re taped and everything. You have courses that are taped,
Peter Fortunato I got a couple of tapes that are in my, under my bed so that when I’m gone, my kids can continue to sell me when I’m not here. But I so love teaching, I saw that it’s a really weak second, from my perspective, to do it on tape.
Bruce Norris Okay, well, I’m gonna, I’m gonna put a plug in for you doing that, at least, at least once because there’ll be a day, Jim Rohn changed my whole life in three hours. I can watch that exact talk. Even though he’s not been here for 10 years. He still keeps me up at night. And so would you.
Peter Fortunato But there will be no exact talk because I have no idea what I’m gonna say when I start
Bruce Norris But you never do. It doesn’t have to be an exact talk.
Peter Fortunato This just so you know. All right.
Bruce Norris Yeah. No, those people principles are. They’re invaluable. And yeah, you’d, you’d want to capture that for the people, honestly, I think so anyway. Do you have Did you have a favorite real estate mentor? You know, here’s what’s interesting. Again, I come from a very different mindset. I in California, real estate wasn’t volatile in price. And it wasn’t anywhere in the prior to the early 70s. It was, it was just a house. And then all of a sudden, California basically went and doubled and tripled in a six year period 74 to 80. And real estate became this commodity. And that had never happened before. But in Florida, it didn’t happen then. So it’s it, I became interested in real estate because my house that I lived in, I sold it, I made 10 grand, and it was the first time I ever had my name on a check that had 10 grand on it. And I thought, what if I had owned three of these? And so I did I own three. And that was by my first process of thinking that I could expand my wealth by owning this stuff, but I hadn’t gone to anybody’s courses. And you already been at it for 15 years by then. So you know, that’s interesting. Where was I going with that? Um, why would
Peter Fortunato Why would I buy real estate if it’s not real appreciate?
Bruce Norris Well, well, in the beginning what was exciting to you about it, because I didn’t know I,
Peter Fortunato I didn’t want to work. So I wanted to get some capital that would provide income. Okay, when I bought my first team, I got out of high school, I was going to acquire enough real estate so that the real estate would pay for my lifestyle, the rent the use of those properties. So I bought my first property on thorndyke Street. That property was a triplex three units stacked on top one, typical North Shore, Boston, triplex. And it was structured so that if every apartment was always rented, and everybody always paid the rent, and nothing ever broke, it would pay for itself.
Bruce Norris So it didn’t pay for itself.
Peter Fortunato I had no clue in 1967 1968 hit it was ever going up in value. I wasn’t going to go live there because it was too comfortable living home with my mom and dad.
Bruce Norris Okay.
Peter Fortunato So people say, Well, why did you buy it? The reason I bought it is the tenants paid for it.
Bruce Norris Now hold that, who modeled that for you? Or I mean, who told you it’s just sort of assets?
Peter Fortunato I don’t have any money. So what what assets can I acquire that will be income producing capital. And it was rental houses. Now I will say I didn’t realize it then. But I do believe growing up with my grandfather having his barbershop underneath six apartments. Yeah, he was an immigrant from Italy. And he had a barber shop and then he bought the place, but always having the apartments as a place to live in income and a barber shop from which to work. I didn’t think of that as a model. But looking back, I believe it was more impactful than I recognize my little.
Bruce Norris Okay. Okay.
Peter Fortunato I mean, I had when I started real estate ’65-’66. Every realtor was an incredible inspiration to me. They taught They showed me what made deals happen. It was just remarkable. I look back at the people in my market, not the teachers who were out there. The guys who are in my market or investors who are realtors who I asked questions, and they answered me and the investors when I price it, I want to grow up to be just like you How did you do it? And they listened to me. And then I started buying some paper, I had a chance to buy a note to yield 15% that was a second mortgage paid for by a school teacher. Or I had a chance to buy a note to yield 8% that was a second mortgage paid for one by one of the investors in town. I always bought the investors No.
Bruce Norris Interesting
Peter Fortunato Cause with that note came the ability to talk to them. And I contact them and I would say gee, yo You owe me this note. I’d much rather instead of you having to send me $30 every month. What about I just forgive the note for 5% of the deal. When they have a hearing they go for variants I be there in the crowd speaking in favor. Having more units in town, those were the people that I wanted to be like, and I wanted that Alliance.
Bruce Norris Very interesting. You know, my introduction to even hard money wasn’t until 19 1992 or 93, that in California, there wasn’t a hard money lender that lent to investors at that time. It just it was all to a homeowner that had like, crummy credit. And they had to borrow outrageous money on a second. And to it to loan to investors. I actually had a guy go door to door to lenders, and say, Would you loan to investors, and the guy that actually worked for us for my company for the last 25 years, was the guy that responded, yeah, and he had never, he had never made an investor loan. But I came to him with, you know, my discounted properties and said, Would you loan loan them, and he realized, holy cow, I can do 50 loans a year with this guy, not one. And that was what was interesting to him. And that’s kind of what what started at all.
Peter Fortunato When I started my job, my goal was to have income coming in, that freed me to do whatever I wanted. So my first year in real estate, as a licensed agent, I earned enough to pay the bills, nothing extra. The second year, I earned enough to pay the bills. The third year, I had to earn 90% of what it took to pay the bills, because I actually had 10% coming in from rents and notes. And then the next year, I had 20 or 25%. And finally, after 10 years, I had enough income coming every month. Good. I didn’t have to work any longer.
Bruce Norris And we’re talking ’75 1975
Peter Fortunato Yeah, I was 28.
Bruce Norris I’ve, I have definitely talked to people over the years where I’ve asked the question when when is enough enough? Because there’s when you write goals, sometimes you know when you’re first starting, man, if I could own a home free and clear, that would be cool. And of course, as that goal gets reached, then you expand it. But there’s sometimes people expand it to where I think it’s, it’s actually has a negative impact on their life
Peter Fortunato without question.
Bruce Norris Okay, because then it’s i. So when I, when I have talked this is sometimes you have to realize, hey, their plan may be their plan, but you don’t have to adopt their plan, you can create what you think wealth is and alight. It might be diversity of choice after you don’t need money.
Peter Fortunato It’s very important to realize that the golden rule is a really terrible rule. Because what it says is doing to others as you would have them do unto you. And really what it should be is Do unto others as they would have you do unto them. Because people value things differently. That’s why commerce happens. And you always have to realize their idea of good is not yours. I got fired as a residential real estate agent. Because I said to a woman, what can you do in a blue bathroom? You can’t do a pink bathroom? Right? How’s she gonna afford the house? Yeah, I’m not gonna do this residential stuff anymore.
Bruce Norris That was your close.
Peter Fortunato That was my close. All right.
Bruce Norris Yeah, you are. You and I are built very. So I had one open house that I conducted. That was it. lady came in and she said you looked at the ceiling. She said, I wish it had a nine foot ceiling. I said it’s very unlikely to get one.
Peter Fortunato Well, I my my brother had a house across from me. And it was wonderful. I was raising my kids across the street from Johnny who had his kids. And it was just great having everybody together. And then when he moved back to Massachusetts, he was left with a big pool house down here. That didn’t work as rental. We’re really very weary of pools and rounds. Yeah. And so he was back in Massachusetts. I said, Listen on Sunday. I’ll bring a TV over there. And I’ll set I’ll have an open house, see who walks in. I’m gonna watch the football game anyway. So we’ll see what happens. And so I was sitting in his house. And this couple walked in, and I’m watching football, and I hear her say, I love this house. And so I get talking, I said, Joe, what brings you out and she said, Well, Ken and I are just married, and we each have our own houses. And I’ve sold my house and if this house is still available when Ken sells his house we’ll come back We’d love this to be perfect hellish for us. We’re going to put the money from the two houses together. So then they left and they went home. And I followed them. And they walked into their house. They sat at the dining table. I knocked on the door. I said, Is this Ken’s house? They said, Yes, it is. I said, you got a deal. I took her money. And his house, my brother and I was nice rental house. paid off the debt with him the other house was such. So good for us. Because they moved in the neighborhood. People said, What did you pay for the house? They’d say? We don’t know. Fortunato. I don’t follow us home. Now we don’t we do this house but that bought us a lot of interest in that neighborhood.
Bruce Norris That’s a funny story. Do you have a favorite? Teacher yourself? do you have? Do you have someone like my Jim Rohn? Do you have one of those?
Peter Fortunato Oh, yeah, I have so many. I gotta say that the best and first teachers for all people that I know, are the people who are successful in their communities, and they should start there. They’re available to everyone. That’s a matter of buying dinner on but think of what I how I’ve been blessed with Jack Miller, John Schaub, Warren Harding. The friends I have Dennis callas, people talk with you, you invest out of town, and sending your money away usually doesn’t come back. But when I was up in Boston, I did joint ventures with Jack Miller in Tampa joint venture with John Schaub and Sarasota joint ventures with Dennis couch. Those guys are better real estate guys than I am. And having access to those friends, and the brainstorming that we did together, and the deals we did together has been very extraordinary
Bruce Norris Well, I gotta tell you, you know, we created the Roni award because of what Jim Rohn did for my life and three short hours, and we started on the west coast. But the reason why you and John, I absolutely wanted you to have that honor is because I’ve never heard anybody say anything bad about either one of you for decades. And that’s that’s what that that’s what that award means to me.
Peter Fortunato Well, I appreciated that real estate is about caring, it starts with caring about people not caring about buildings, it’s caring about people, you can help people every single day your life if you just care enough. I when I went to the Monday night meeting on Monday night this week, and there was a young guy sitting next to me. And he’s 33 he’s got out of the military. And Mark and other friend has a lease option on a house that the owner of the house is saying, Would you please get me off the VA loan. And this kids, the kid sitting beside me, he’s looking for his first house. He’s a veteran, he can go in assume that alone release the other guys pick up a house a great deal, and we put it together over dinner at trips diner.
Bruce Norris That’s, that’s really great. I think when people begin in this business, they’re so tense about the conversations with sellers. And they’re thinking about the wrong way. If if you approach the business like you do, in other words, I’m going to I’m going to listen to your situation, I’m actually going to suggest things that so that solve it. I may be a participant or not. But then you’re relaxed. You don’t have any ego at stake. You’re just there to solve problems. And the more years you bring to that table, the more confident you are like that person better talk to you. Because you’re not going to solve it this way. You’re not going to think about what I know
Peter Fortunato if they keep it a secret I can. It’s only a miracle if I get something that works. But what I do is my job is to discover so I always open if someone comes to me about a house with Why would you sell a nice house like this? Oh, nice Shut up. I need to find out what’s going on in their life. And if they say, Well, I hate it here. I want to go to Miami. They say well, in the event that you’re able to go to Miami, where are you going to live? Because if they don’t have a place to live, you may both have to enable them to leave this one behind. And somehow or other help them get a house with a goal. But those questions I asked the question then shut up but why would you sell a nice house like this is very valuable question to get them started talking about what’s going on. My first time. My very first house the man was selling because he got a job in Fort Lauderdale. And it was a terrific step up. He was offered this great advance in his career. But his house was in Beverly, Massachusetts, a house 1400 miles from work is very inconvenient. Yeah. And so I bought that house subject to the mortgage, so he can move on and get his family in a lot of detail. The next house that I bought was the guy on the triplex, and tenant wrecked the place. Now, they really they made a mess of the place. And it was he was old, he was 47. And he was just heartbroken and distressed. And I bought it subject to the mortgage and seller carried second, because I took on the responsibility for cleaning it up and dealing with the tenants. So I solved a management problem for them. The third house I bought, the people had a four Plex. And they were selling the four Plex because the kids were now getting into junior high school, they wanted to living in a four Plex they want to go live in a single family house. Well, so they back then it was $50,000 for that single family house, they found the house they wanted. I love the four Plex I was only 50,000. Light,
Bruce Norris right.
Peter Fortunato And so what happened is they were wage slaves, they could qualify for good financing. And back in those days, that was seven and a half percent 25 years. With 20% down, so you 10,000 down, right. So I said, Listen, put the contract in on that house, because you can get the financing that’s available, not to me, because I’m an unemployed real estate agent investor. And so that was a $40,000, seven and a half percent 25 year loan that they got to buy their next house. So I agreed to pay them seven and a half percent, 25 years $40,000 for the four Plex and give them the $10,000 to put down. I went to my tenant in my second house and borrowed the $10,000 because they had money in the belly Cooperative Bank, paying them two and a half percent. And I was willing to pay him nine.
Bruce Norris I
Peter Fortunato but that involves interfering, finding what’s going on. So to help. My tenant was better off with three times the income. The people got the house they wanted, I got a nice four Plex. Now we were talking earlier about why would I do that back when I was starting the 20 rentals that I had my dad a college, which was four triplexes and two, four plexes. If I done nothing more for getting my Volkswagen bus and travel the world today, they’re all free and clear.
Bruce Norris Right?
Peter Fortunato So what do you think 20 rents are on the North Shore of Boston?
Bruce Norris A lot.
Peter Fortunato See, yeah, I’d be doing better than I’m doing here with all the training all the stuff I’ve done. But in the case, that’s what it takes and what people don’t don’t recognize. I bought a house for no money down and no cash flow, nothing adjust the tenants paid for it in 1970. So there was a 225 a month mortgage payment. And from 70 to 75. Inflation affected everything except that mortgage payment. Right. So in 1975, I had $50 a month in cash flow. And that came because the rents went up, all the expenses went up. But the 225 was fixed. In 1980. I was up to 1200 dollars because everything had gone up again. In 1985, I was up to $2400. But in 1995, the building was paid for. And when it was paid for I was up to $7,000 in cash flow. And today that building rents for $4,000 a month. The tenants bought it. That’s why I bought the real estate when I was in college. When I that’s why I had the goal of buying the real estate when I had a high school because someone else pays for the only benefit I’m giving them as the use. I’m getting the tax benefits, which I didn’t need when I began. I’m getting the appreciation, I’m getting the amortization and one day I’m getting some cash flow. That’s a wonderful opportunity to acquire capital and let somebody else buy it for you.
Bruce Norris Last question. Are you concerned and the reason I’m asking this and one of the reasons I’m sitting in Florida right now Now instead of California, is the legislation in, in California has made some decisions by Proclamation. I didn’t know they had the right to do. And they’re talking about ideas. Now this is the state of California saying they’re going to tax your overall wealth, a wealth tax just for the state of California. rent control, changing the tackle way that real estate tax. So I guess I’m I’m curious, do you see things like depreciation? $500,000, tax free gain on a couple selling a home? Do you see those things being under attack? in the next couple of years?
Peter Fortunato Of course,
Bruce Norris Okay,
Peter Fortunato Government is evil. Yo, always in every class I do. I tell people never in the history of the world has there been a situation so terrible, the government could not make it worse. But you got to recognize these power hungry, crazy people who all took an oath of office, saying that they will going to defend and protect the Constitution, United States have done what they’ve attacked freedom of religion, freedom to assemble, freedom of speech, freedom to bear arms and protect yourself and your family. It’s madness. They’ve attacked freedom from unreasonable unreasonable search and seizures. And they’ve attacked property rights. So now suddenly, that’s where the greatest damage is going to come from. We got people who lie and claim to be leaders, when they’re not leaders, they are rulers, and they coerce and they plunder. And it’s those of us who are investors and free people who care about other people that have to become the leaders. And we have to attract and encourage and help other people, because the government is the enemy. And the fact that they’ve taken away the rights and the freedoms we thought we had is a terrible thing. The thing I’m most concerned with is, as they’ve said, contracts are no longer enforceable. They’ve destroyed business, and I don’t know that we can fix that. Okay. They say no, no, you can’t collect. You got to like they say, Oh, no, you see that loss of the power of a contract? Okay. It’s an awful lot because any business needs the contract for the business to prosper. I think the small businesses that were destroyed to the biggest businesses to Wall Street is threatened by that lack of support for contract law. I really see that as treacherous.
Bruce Norris I agree with that. I, the way I put it was, I thought I knew the rules of engagement. And all of a sudden I realized that I don’t
Peter Fortunato They have guns. That’s all it is. They have guns. They are they coerce. That’s why I’m not a libertarian. I am an Anarchist, because I do not believe anyone has the right to course and I do not believe any group has the right to course. And I think people shouldn’t put up with it.
Bruce Norris Fair enough. Well, I have we better end Pete. I enjoyed our talk immensely. I hope I hope another day you and I get the share and teaching seminar together. I really enjoyed that.
Peter Fortunato Well, we’re close by now here in Florida. Be very, very easy. Bruce, okay. All right, Pete, thank you very much.
Narrator For more information on hard money, loans and upcoming events with The Norris Group. Check out thenorrisgroup.com. For information on passive investing with trust deeds, visit tngtrustdeeds.com. The Norris group originates and services loans in California and Florida under California DRE license 01219911. Florida mortgage lender license 1577 and NMLS license 1623669. For more information on hard money lending go to the Norris group comm and click the hard money tab.