S.E.C. Real Estate Observer

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Editor’s Note:

Henry H. Blanton is a long time friend of the Society of Exchange Counselors. A native of Clearwater, Florida, Henry has been a licensed real estate broker in Florida for the past 52 years. He was the recipient of the Florida Real Estate Exchangors (FREE) “Exchangor of the Year” Award in 1971 and was President of FREE in 1974.

In 2002, Henry was honored by the Chairman of the Florida Real Estate Commission with the presentation of a plaque expressing the “Commission’s gratitude for his 50 years of dedicated service to the Real Estate profession.” Governor Jeb Bush said, “We appreciate the important role Blanton plays in the economic health of our state.”

The Florida Gulf Coast Commercial Association of Realtors (FGCAR) presented him with the Pinnacle Award for the “Investment Deal of the Year” for the years 1999 and 2002. FGCAR presented the “Lifetime Achievement Award” to him on March 11, 2004.

Henry also serves on the Advisory Board of First Citrus Bank in Tampa of which he was a founder and principal shareholder. He is an active yachtsman and enjoys entertaining aboard his 48 ft. Sea Ray named “Alliance Partners.”

We are sure you will enjoy his perspective and wisdom.

Wealth Creation through Real Estate

Henry H. Blanton, An Observer Guest Columnist

I don’t believe in a get rich quick approach to wealth, but I do believe in a get rich philosophy. I believe that you must set specific goals and have a burning desire to achieve them. As you achieve those goals, you must continue to set new, even higher goals. I have found that most people simply don’t have the burning desire that is required to achieve wealth – or if they try, they fail to keep the fire burning long enough to achieve their goal. I say that money alone does not buy happiness, but it is a darn good down payment. Seriously, it is but one important ingredient in achieving a happy and comfortable lifestyle. True happiness comes from within.

I believe that we, as creative marketing professionals, are happiest when we have just closed a transaction in which we have orchestrated a situation where all parties involved had their needs met. In other words, helping others to achieve their goals lifts our spirits, is personally fulfilling, and is often financially rewarding.

Back to the subject of money and the creation of what I call the GIANT CLIENT. I’m talking about earning $1,500,000 in commissions plus another $1,000,000 or more in profits within the next five years.

I’m now going to share my secret formula with you. I can assure you that it works, but only if you work. I call it my 13 “Ps” formula: Solve People and Property Problems with Patience, Perseverance and Persuasion, Performed with Plenty of Passion, while experiencing Phenomenal Personal Pleasure Pleasing others.

Now, the real essence of this formula revolves around the last word in the Ps formula – “OTHERS.” When you truly focus on helping others, rather than possessing the “What’s in it for me?” attitude, you will be headed along the path toward personal wealth. You may ask, “What’s this got to do with creating a GIANT CLIENT?”

To me creating a GIANT CLIENT is creating a syndication in which I have a very active role and work with others in synergistic way. I love that word, “synergistic.” To me, it means working together in a way that results in the total being equal to more than the sum of its parts. When compatible people work together, it often means “two plus two equals five!”

I like syndication – it pays well while also meeting the financial goals of more than one person at a time. In addition to believing in and using my 13 Ps formula, I believe another ingredient for success in this profession is to be unique or innovative. You need to be first, best, or different. Over 100 years ago, Albert Hubbard said, “One machine can do the work of fifty ordinary men, but no machine can do the work of one extraordinary man.” I say that one passionate real estate broker can help many people achieve their financial goals by inviting them to participate with them in real estate ventures that they represent exclusively.

I made a decision to structure a unique entity for the benefit of a relatively small group of investors with a common set of goals. The goals are to invest in real estate equities would likely increase significantly in value over a ten to eleven year period, with a reasonable degree of security. My formula was to create a private, well-funded entity that I would manage and that would embody unique investment strategies and a long-range plan.

Here are the basic elements of the venture:

• Funding. I would seek investors who would, in the aggregate, contribute a total minimum amount of $5,000,000 to initially capitalize the venture.
• Management. I would create a Board of Directors with a minimum of five and no more than seven partners to be comprised of a real estate attorney; a knowledgeable accountant, fully experienced in tax implications of Section 1031 transactions; a Certified Financial Planner or a banker who specializes in real estate finance; a real estate broker experienced in commercial site selection and development; and, of course, myself.
• Investment Goals. We, as the Board, would set about to acquire a diverse portfolio of properties, investing in a variety of types of income property, multi-family and single-family zoned land, commercial and industrial tracts, and farm land in the path of growth. Because market conditions change from time-to-time and in each local market has its own unique cycles, we would invest in different markets throughout the country.
• Selection of Members. We would be selective in our invitations to prospective investors to become partners. We were interested only in those who were “qualified investors” and who were interested in being more than just a silent partner. Therefore, our partners would be able and willing to share their knowledge, experience, and contacts with the management team, bringing more to the table than just their money. I call this process “synergy.” In order to limit the partners’ liability, we made sure that there would be no legal requirement or obligation for additional contributions beyond their initial investment.
• Holding Period. Every property acquired would be held as an investment, typically for two or three years, with an intent of being able to avail ourselves of the tax advantages of IRS Section 1031 guidelines when transferred at a handsome profit.
• Brokerage. My brokerage company would have an absolute exclusive listing on all properties sold, exchanged, or leased, while recognizing that most transactions would be in cooperation with other real estate professionals.

We filed our Corporate Charter and Partnership Agreement and got underway a little over four years ago with eight partners, with a total capital contribution of $6,100,000. We have not accepted any new partners, but two of the eight partners subsequently increased their capital accounts by an additional of $1,050,000, bringing it to a grand total of $7,150,000 of contributed capital. By the end of 2003, the partnership’s equity had increased to $21,000,000, including nearly $4,500,000 in cash and owned full ownership or a joint venture interest in 21 properties with total market value of nearly $33,000,000.

Let’s review some of our original objectives. We were going to acquire a diverse portfolio of properties in different markets so as to provide a greater potential of security for the partners. We have done that. We have acquired properties to hold as an investment, typically for two or three years, with the idea of maximizing the value of each partner’s investment over a ten or eleven year period. We have kept focused on this long-range objective. My partners on the Board are also keenly aware that the prospect for the partnership’s success increases significantly when we all bring our diverse skills to bear on an issue and work in close relationship with the other the partners.

I fully expect to exchange or sell (under 1031 guidelines), a minimum of 80% of the properties presently owned by the partnership, along with acquisitions of another $70,000,000 worth of property during the next two years, personally earning commissions well in excess of my original goals. After several years of effort, our momentum is now building at a rapid pace. By the time we reach the seventh or eighth year of the partnership’s operation, I think I can say that I have created a GIANT CLIENT.

In conclusion, I would like to point out that each of you probably have friends, relatives, or contacts who would be anxious to invest with you in a similar type of partnership. Please remember that any of you who may be interested in pursuing this type of syndication, should be reminded of the principal of helping others. As I stated earlier, it works, if you work. You must be prepared to dedicate yourself to making it happen and to keep in mind this is a long-term program. That means that you will probably have substantial front-end costs or investments in the program before the big dollars begin to come in. Above all, please remember that regardless of all the computers, cell phones, satellite photos, or other high tech gadgets that we now have – this is still a people business. It is always one-on-one, with a burning desire to help others.
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