I have heard it said everyone has a rich uncle and a rich aunt. Just far enough displaced to leave the inheritance to some closer relative. Well, as truth would have it I had just such aunt and uncle. They were not related. My uncle, Leon, was the stepbrother of my grandfather on my mother’s side and my aunt, Lilly, came from my father’s side and I don’t know how she fit in.

    Regardless of connections, they were very well off and I have no direct part in the inheritances they left. It was estimated my rich aunt Lilly possessed upwards to one billion and my uncle Leon had much less, but never-the-less his endowment to his natural son was more than one million. Even though both died and I was not named in either of their wills, they left me a legacy that is incomparable to and far more precious than the material wealth. They told me how they did it.

    In the late 1800’s aunt Lilly married young to a fine man who was an executive for a new company called Coca-Cola. Needless to say, aunt Lilly’s husband had stock options. A few years later this fine gentleman prematurely died leaving aunt Lilly the “coke” stock, which she never sold. Aunt Lilly died in the late 1990s with her portfolio still holding her “coke” stock and many others to boot. Can you imagine how much money she made just off the “coke” stock if she only had 100 shares? (About 600 million!) I do know Aunt Lilly had many more than 100 shares when her husband died, but to quote the exact amount, I simply cannot. In all her 90 plus years, Aunt Lilly never had a job, all she had working for her were investment advisors making her richer and richer and richer.

    When aunt Lilly’s pet duck “passed", as she called it, she actually buried that duck in the pet cemetery complete with a ceremony. In the midst of my mining town poverty mentality I thought this “duck burying” act to be quite strange. I didn’t dare to tell her I went hunting and shot the things and ate them. Now I think the $5,000.00 she spent burying her duck was not even a measurement of any consequence to her truly amazing overall wealth. She may have been a strange “duck” to me, but she used the ability of other people to grow her fortune to an amount far beyond this small mining town kid’s mentality. I thought drinking the free Coke-A-Cola she got delivered to her house every month by the coke executives was the epitome of remarkable wealth. (She took the empties back to the store for the deposit.) Aunt Lilly’s contribution to me was: money to her just is, it must be frugally respected and it is easily acquired if done right.

    Now uncle Leon was a different pup. He didn’t come into possession of a remarkable wealth-building tool like “Coca Cola” as aunt Lilly did. Uncle Leon started with nothing, but exceptionally good character. The only legacy my uncle Leon had handed to him was his good character; ingenuity and a desire to excel. These elements impacted my life greatly in a rather solidifying manner.

    To make the long story of years of affiliations with uncle Leon short, I’ll mention the turning points he inspired in my life. When I was small uncle Leon would tell me he lent money to people and they would pay him back more than he lent them. Naturally I was too young understand what he was talking about. He was merely planting seeds he knew would sprout later in my life.

    Uncle Leon was not a banker, for a considerable time in his life he worked for and Arizona copper mill in the powerhouse with my grandfather, his stepbrother making less than 10 cents an hour. Eventually he was able to “quit his day job” because of his saving and preparation for a better future. As fate would have it, years later I obtained my real estate license in the same town where uncle Leon had moved after he quit his “day job” at the mill.

    Uncle Leon’s aunt died and he called me to come and sell the house she had left him. That is when uncle Leon passed to me his secret of success and how I could fit in his extraordinary wealth-building tool in my life even though I didn’t have any money at the time. Actually, he showed me more of how wealth-building tools exactly worked. While we were talking about his deceased aunt’s house his phone rang (before cell phones). The caller was a real estate broker. Uncle Leon made sure I was getting both sides of the conversation and proceeded to make and close a money deal on the phone with that broker. I was flabbergasted with what I heard. It was so embarrassingly simple, I almost couldn’t believe what I was hearing. At that point everything I had been taught by uncle Leon and aunt Lilly came to have very significant meaning.

    The broker had a buyer for a property that could not get the money from his bank to complete the purchase, so uncle Leon put the money up for the buyer at slightly higher interest than what the bank was charging. (Notice the "slightly", he didn’t gouge or take undue advantage, which I later learned was the business practice of a genius.) He then explained to me that not all these money-lending deals went as smooth as glass and that he indeed had to foreclose (pre-Trust Deed) a time or two. He also told me foreclosure was always a last resort. Many times he would modify the loan by novation or he would allow hypothecation of his interest in the property for the hurting soul in anticipation the hurting could recover and have a stress free life. I believe of all uncle Leon’s assets his impeachable character was his greatest. This is the true wealth I remember the man possessing.

    Many people are not directly involved with the money market and don’t understand novation or hypothecation, which is reasonable and quite understood. People need their money to grow and that is why they deal with people who do understand these things. The bank uses novation type transactions on your home loan everyday with out your knowledge (for their benefit). Here is a simple explanation: novation means to change the structure of the original loan (re-write the loan). Novation can be used to make something workable for the debtor so he can recover from his unfortunate situation and recover financially. Lenders and bankers refer to this process as, loss mitigation on troubled loans, generally what they offer doesn’t work and isn't intended to, because they don’t run their business with impeachable character as uncle Leon did, but only for immediate profits. They also call them “forbearance” agreements, which again generally aren’t workable for the debtor/mortgagor.

    Hypothecation is quite a different story. It could be comfortably said, lenders and bankers will never hypothecate as hypothecation greatly increases their chance of losing. On the very rare occasion when one of uncle Leon’s notes were going sour, uncle Leon would move his mortgage to second or third place, forego receiving payments for a preset time to give the mortgagor time to recover from his financial woes. Bankers call this poor business practices, but uncle Leon died very well off, with a good name and a clean loving heart. He did not leave a wake of human blood in his path.

    Many years ago, uncle Leon died a multi-millionaire a feat at the time required him to be the holder of over 200 well-performing notes. He left a widow to old to handle a business she was never involved in first hand, which worked well, because he taught his son along the way to pick up where he left off. As for me he gave me an irreplaceable legacy. (In uncle Leon’s later years the real estate broker’s in his life would make the loans for him and conducted business in the same manner that he did.)

    The moral of the story carries great wisdom? Aunt Lilly had money, earned it, made it grow and kept it. Aunt Lilly loved her duck and people, but was never involved with people on a business level such as uncle Leon. Uncle Leon had money, earned it, made it grow and kept it. Uncle Leon loved people and literally shared his life with them. Both did it differently, yet the same. How they did it is what counts. Aunt Lilly and uncle Leon showed me how to use my wealth and my broker’s license as a vehicle to benefit others…………..

Thanks much,

Ron Stacey
      COO, GRI
      A Certified REO Specialist
      Diamond Club Member
      Experienced Since 1972

P.S. If you have some money you need to lend out on a project, give me a call.

True wealth is still in real estate, you walk on it everyday, don't miss it.........