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H OLDING S TRA TEGIES AND E XIT S TRA TEGIES

agreed and asked him, “Jerry, why couldn’t you wait until you came
back to New York? Why did you call me on a Saturday night?” His
answer was, “When I flew out last night I was sitting beside a man
who happened to mention that he was a big real estate operator. I told
him my whole story and he said there’s only one lawyer you should
use, George Ross, he’s my lawyer but he’s probably too busy to han-
dle your matter. So I decided I better call you right away.”
I got Jerry his $5 million and he was so excited he thought he had
discovered an untapped world of real estate opportunity. He said he
was thinking of buying property in another area he perceived as a
strategic location and go into land banking as a business. I warned him,
“Jerry, what happened to you is a fluke. Don’t think it will happen
again. I strongly suggest that you put the money into something you
know.” A short time later he asked me what I thought of a particular
property he was contemplating buying for land banking. I told him,
“Jerry, forget it, I know that block. Sol Goldman has it locked up with
the piece next door and you’ll die holding the piece you’re contemplat-
ing buying.” He didn’t like my comment so he hired another lawyer and
bought the parcel I warned him about. In three years, he managed to
blow the entire $5 million. Be forewarned: Land banking is not for the
timid or those with limited resources. Staying power is a prerequisite.

Renting with a Buy Option

Renting houses or apartments has always been a great way for realty
investors to show a good return on their investment. However, when
it comes to renting houses to tenants, there’s another potential
method one can use to earn an even greater return. You can do it by
giving a tenant an option to buy the house; if they choose to buy, you
will agree to apply a portion of the rent toward a specified purchase
price. For example, say you rent a house for $950 per month and you
give the tenant the option to buy it within a specified time. You
agree that if the tenant exercises the option to buy, you will allow

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