Jim Wood doesn’t teach real estate investing and other business skills to college students for the paycheck. Rather, Wood teaches for the sheer pleasure of passing on the pragmatic entrepreneurial knowledge that canmake anyone wealthy, if they’re willing to work for it.
Wood is program chair for management, marketing and real estate at Cincinnati State Technical and Community College, where he’s designed and implemented rigorous and relevant certificate programs in real estate, entrepreneurship and financial planning. His engaging classroom lectures and insightful slices of real-world advice cover a lot of ground, but they all follow one essential path of economic discovery.
“It’s learning how to play the great game of business,” Wood said. “Because once you learn how to play the great game of business, unforeseen and horrible things can happen to you and your company in life, but you can go back and start another business. And frankly, because you failed and have gained so many lessons from the past, you’ll probably be even more successful faster in business No. 2.” Or business No. 3 or business No. 4—whatever it takes to turn your passion into profit, Wood said.
“You’ll never get wealthy in America sooner rather than later by working for somebody else,” he said. “I literally want to be able to drop my students off somewhere in the country and say, ‘OK, using your sales abilities and your business skills and your marketing skills, how can you get a paycheck coming in as quickly as possible without depending on somebody else?’
“I want these kids to be job optional somewhere between age 40 and 50. I want them to wake up one morning and go, ‘Done!’”
After 20 years as an innovative teacher and leader at Cincinnati State—shepherding the ambitions of countless young people in search of self-reliant financial freedom and early retirement—the 63-year-old Wood plans to retire at the end of the current spring semester.
“It will be a pretty big loss,” said Cincinnati State student Casey Johnson, 23, who this semester specifically enrolled in Wood’s real estate investing and property management classes when he learned his mentor was soon leaving. “You have teachers who can say all they want in theory, but he’s actually done it.”
Don’t Have to Work Anymore
Wood and his wife, Liz, both Cincinnati natives, live on what he proudly calls his “dream piece of property,” a 128-acre farm with a pond in Rising Sun, Ind., just under an hour’s drive from the Cincinnati State campus.
“Once you have enough assets, you don’t have to work anymore. I don’t have to have a job anymore,” he said. “But I’m also Midwestern and frugal. I drive ordinary American cars. In my life, I’ve also owned beachfront condos in Florida. I’ve owned airplanes. But it’s one of those things where it’s almost like ‘been there, done that.’ At this stage of my life, showiness is not what I’m into.”
Wood got to the secure place he is today by accumulating assets and starting to invest in real estate in the 1980s, while he was raising a family and teaching such subjects as applied math and biology at Harbor Springs Public Schools in northern Michigan.
“Back in those days,” Wood said, “Liz and I would buy a house that was in terrible condition, move into it, fix it up, live in it for awhile, and then over time turn around and sell it and move into another house that needed a lot of work. That’s the pattern of how I picked up the passion. These places were so ugly, but they could be so nice.”
When Wood and his family moved back to the greater Cincinnati area in 1990, he began buying rundown houses at estate auctions. He would rehab them on nights and weekends, and then sell at a profit of $8,000 to $12,000, sometimes even $15,000. He thought that he was making good money, until he met an older fellow with more experience in the game.
“He said, ‘You should be making $25,000, potentially $30,000 per house,’” Wood recalled. “He said, ‘Here’s your big problem: You’re depending on realtors to tell you what houses are worth, and you’re paying too much for your houses.’ Realtors want to sell the houses for as much money as they can, and I didn’t know that my job was to get the house for as cheap as possible.”
In addition, Wood learned that he was wasting time and money in turning the properties around. “I’d be sitting on a house, doing my own work for six months, and then it would take some time to sell it. And so I had all these holding costs—mortgage payments and taxes and insurance.”
Enlightened, Wood started attending real estate investors association meetings in Cincinnati and getting more training, “and things started turning around and getting better,” he said. “I’m always interested in improving. If somebody’s got a better idea, show me.”
Times change, and today Wood is the one offering sage advice on how to start small and grow large in real estate investing, which he still believes is the best way to make money. “It allows you to leverage,” he said. “When you can buy a house and only put down 20 percent, and the bank puts up 80 percent, you get to keep 100 percent of the profits.“
I want my students to say: ‘The only way to get wealthy in America is to own businesses and grow businesses.’ And real estate’s just another type of business. It’s a different product, but it’s still a business.”
Wood looks at the markets and changes his strategy of real estate investing and what he teaches students, based on what’s working at the time with as little risk as possible. What’s the most effective way to make money from real estate in 2014?
“Here’s what I tell my students: I want you to take and control properties, but I don’t want you to own them. I want you to go out and get houses under contract, typically under lease-option agreements and, if you can, for the entire duration of the mortgage that’s left.”
For example, Wood said, a house that sold for $230,000 in 2005 may be worth only $180,000 today, as a result of the economic downturn. That house can be bought under a lease-option agreement and then sold to a couple who got burned from the downturn, and have since recovered financially, but whose bad credit history prevents them from obtaining a loan to purchase a home.
“I like to take those people and sell them the house that I’ve got under a lease-option agreement,” Wood said. “They make the mortgage payments, and at some point in the future, that house is going to appraise again for $230,000—we just don’t know when. But I’m confident that sometime between now and 24 years from now, that house will appraise for $230,000 again. When that happens, they’ll be all set with a normal, conventional loan. “So I’m kind of helping people who are underwater and people who have crummy credit and can’t get into a house again. That’s what I do now.”
I Want You Guys to be Rich
Wood’s way may not be everyone’s way, so he sees it as his duty to inform students about every viable option to create wealth through real estate. “I’m teaching students how to wholesale, how to buy houses and fix them up and sell them,” he said. “I’m teaching students how to buy houses using option agreements and lease options. I’m teaching students how to buy smaller commercial properties.”
Yet with 80 percent of students at Cincinnati State receiving financial aid, the most frequently asked question Wood hears is: “Where do I get the money to start investing in real estate?” In response, he talks about how to use private lenders and hard money lenders. But the teacher also never fails to tell his students that nothing beats socking away a little cash every day.
“You have to save,” Wood said. “I tell them, ‘I want you guys to be rich.’ As far as I’m concerned, no matter what your background is, you’ve got three choices in life: You can choose to be rich, poor or middle class. But you cannot get rich if you cannot save money—it’s impossible.
“It’s about the habit of saving money, not how much you save. If it’s nickels, that’s OK.At the end of each day, there are three jars—savings, investing and tithing—nickel, nickel, nickel. When that’s easy and affordable, then it’s dime, dime, dime. When that’s easy and affordable, it’s quarter, quarter, quarter.”
He’s Always Been A Mentor to Me
It’s that kind of common-sense information that Wood prides himself on sharing, not only with his college students, but also with middle and high school students who attend his lectures as part of the annual Youth Entrepreneurship Academy, sponsored by the Ohio Real Estate Investors Association Conference. At the Academy, Wood stresses six streams of income with real estate at the top of the list, followed by starting a small business, creating an Internet business, information marketing, network marketing and stock market/options trading.
“The younger kids, they just wonder if this is something that they can really do,” Wood said. “It’s like, ‘I’m too young, what adult would pay attention to me?’ “In a lot of cases, I’ll teach them to call realtors on the phone. And the bottom line is that it’s very difficult for a realtor to tell if he’s talking to a 16- or 17-year-old or a 28-year-old—as long as it’s not face to face.”
Parents still have to play a major role in any deals, though, because until someone is 18 years old, they can’t legally contract and buy a house. “It has to be in an adult’s name,” Wood said. “But if they’ve already got a Roth IRA that their parents have set up for them, they can potentially buy the real estate within that Roth IRA.
“Particularly, if they’re just taking $100 out of their Roth IRA to put a property under an option agreement, and let’s say they sell that property and they profit $15,000 from that property, that entire $15,000 amount can go back into their Roth IRA.” When 14-year-old Quentin Gould attended the Academy, his ears perked up when Wood spoke.
“He’s a good lecturer,” said Quentin, who has already begun to invest in real estate. “You don’t want to go buy a house and just break even every time, because you won’t get anywhere. That’s one of the main things I remember.” Quentin, whose business card at the time read “Quentin’s Real Estate Investments,” definitely tapped into Wood’s can-do message.
“A friend asked me when I thought I’d make my first million,” Quentin said. “I said, ‘Probably in my twenties.’ And she was going, ‘I bet you could do it by the time you’re 16.’ And so I’m trying to get there by 18.”
Further down the road of her entrepreneurial dream is perhaps Wood’s biggest fan, Michelle Hummel, 36, who graduated in 2004 with an eCommerce Marketing Certificate from Cincinnati State. She credits Wood with helping her develop the know-how and confidence that led her to create several thriving online businesses, including MyFashionGuru.com and WebStrategyPlus.com.
“He’s always been a mentor to me,” Hummel said. “He’s really the type of person who makes you think not only outside of the box, but on different levels.“He’s inspired me in the sense that my dream job is to be an angel investor, because it’s almost like being a Jim Wood. Sure, I’d love to be fabulously wealthy—and I’m doing very well—but to me, it’s not all about making money. It’s about helping people.”
Although Wood will soon bid adieu to Cincinnati State, that doesn’t mean he won’t continue to reach out to those who have the strong desire to financially better themselves. His future plans include creating a company that will give him the opportunity to speak to different groups around the country and also offer online courses about developing multiple streams of income.
Wood’s method may change, but the message will be the same: Don’t be afraid to fail. Never give up. And be open to what others can give you. “The whole business of ‘I’m a self-made millionaire’ that you hear people say—no, you’re not,” Wood said. “Nobody ever got there by being self-made. We all got there by having the expertise of other people along the way. You’ve just got to be open to listen to their expertise.”
Article Compliments of Community Investor Magazine
Brian McTavish is a senior writer for Community Investor magazine.