Over the last couple of years we’ve developed a friendship with an older man that owns a number of homes out near our lake house. He is retired and lives off of rental income from approximately 15-20 rental homes he owns. Fred still owns every house he’s ever purchased. The majority of these rentals are in Seattle and most are in lower income neighborhoods where he charges low rents but also does the minimum to keep the houses in rentable condition. Recently “Fred” has started picking up very small, old, dingy cabins in the neighborhood out at the lake which has caused a number of our neighbors to get angry that he is going to “slum” out the neighborhood. We have mixed feelings about him buying the little cabins. On one hand, we’d love to see someone buy the cabins and knock them down to build nicer, new homes to help improve the neighborhood. On the other hand, if he has the money to buy them, he should be able to do whatever he wants with them.
Last weekend, Fred came by to talk to us and make sure that we weren’t mad at him for buying the dingy old cabins to rent out. My only comment to him was that we hoped he’d be careful who he rents to because when you are renting at the very bottom of the rental market, statistics say you are going to get some real winners and some real losers. The last thing we want out there is some shady character dealing drugs or creating a nuisance in the neighborhood. He promised to keep a watchful eye on the renters and he asked us to call him if we ever saw anything going on that shouldn’t be. That was good enough for me to feel “okay” with the situation.
Anyway, this post is more about Fred than it is about any specific rental properties he owns. Fred is a pretty wealthy guy. If I had to guess, I’d put his net worth at over $10M total. Fred didn’t go to college and worked hard over his lifetime to acquire what he has. If you were to see Fred on the street you’d never guess he was worth so much money. Sometimes you might even stop to consider offering him a dollar due to his appearance. Fred buys all of his clothes at second hand stores. He had me convinced that he moonlighted at a Wendy’s, a Taco Bell and a McDonalds because he always wears shirts with the logos on them. His story went something like this: “A friend of mine owns a number of fast food restaurants in the Seattle area. He asked me to open a couple of the restaurants each week and put the money in the cash registers etc. On Tuesdays I open the Taco Bell. On Wednesdays I open the Wendy’s and on Thursdays I open the McDonalds”. While I was skeptical, after weeks of him telling me all about these jobs, I finally figured he must be telling the truth. A month later a couple friends of mine out there started laughing and told me that he has never opened any of the restaurants. He made the whole story up. The reason he has the shirts is because he bought them at the second hand store. What’s comical about these shirts is that they are the nicest shirts I’ve ever seen him wear. He normally wears shirts and pants with multiple holes in them. At first I thought maybe he just wore those clothes when he was out at the lake, but he doesn’t think twice about going to one of the fancy Indian casinos near the lake wearing the same clothes.
When it comes to food, Fred isn’t picky. He gets all of his bread at the bakery thrift store and only buys the stuff that is about to be thrown out. All of his ketchup, mustard and mayonnaise are in the little packets that you get in restaurants. A few nights a week, when Fred is back at home, he stops by the small local grocery store near his home at just the right time in the evening when they are clearing out the deli case. There is always a plate of food prepared for him at 75% off the retail price because the food was going to have to be thrown out. I’m sure the people at the grocery store believe they are keeping a poor old man fed. Little do they know.
Fred loves stuff. To say he is a packrat is a serious understatement. Of the 5 houses he owns near the lake, only one is not filled with his stuff. (His renters have to tolerate all the storage areas of each house being full of his “stuff”.) Every time Fred shows up at the lake, he has more stuff with him. Over the years he has developed a reputation for being the guy that is always happy to receive free stuff. There are piles and piles of used lumber, multiple clothes washers, dryers, dishwashers, boat motors, boats, old dingy furniture, old tv’s and the list goes on and on. Fred spends a lot of his time trying to figure out where to put the additional items he shows up with. Apparently his regular homes and rentals in Seattle are equally full of stuff. When you talk to Fred about any of his stuff he lights up. He can tell you, with striking accuracy, where he got each item, what he paid for it, and what a great deal it was. As he’s telling you all about the item you can just feel the energy that talking about the item creates for him. Fred NEVER buys something new. In fact, Fred usually buys stuff that is very old and is probably going on it’s third or fourth owner. To him, if it works, it’s shameful to buy something newer to replace it. Fred still shakes his head when telling the story about how his daughter and her husband replaced all the old kitchen cabinets in their house. They were probably 20 years old and his daughter wanted to update the kitchen with newer cabinets and granite countertops. Needless to say, Fred brought all the old cabinets out to the lake and put them in one of his places there. When one of his rentals needs a new door or window, Fred has more than enough old doors and windows to cover it.
Fred was recently in a car accident and his car was totaled. The car he was driving was a Mercury Cougar that was given to him buy a little old lady after she died. The car was, by far, the nicest thing he’s driven in years. It was an early 1990’s car and probably felt like a Cadillac compared to his old Ford truck that he had been driving for years before that. Unfortunately the old Ford truck’s engine died so now he’s driving an early 1970’s Dodge Aspen. The Dodge had been sitting in his yard at the lake for at least 7-8 years. I was surprised that it ran but he has diligently started it every few months since he parked it there so it was quick to put it back in to service.
Fred is an interesting guy. With the amount of money that he receives in rental income (he owns all the houses) and investment income (he has an accountant and attorney that help manage his estate) he could drive whatever he wants to, live wherever he wants to, wear whatever he wants to and go wherever he wants to. The thing is, Fred doesn’t care about any of those things. He simply loves to find new bargains, or find a new use for an old item that he’s had sitting around for years.
As we were sitting down by the lake one night having drinks (He only drinks “Milwaukees Best” beer) I asked Fred, “Are you ever going to sell any of your houses, or spend any of your money?” “Nope”, he replied. “I’m leaving everything to my kids. They can do whatever they want with all of it.”