A Tenant Pointed a Shotgun at Him. Real Estate Still Made Him a Millionaire

Why would someone buy land on the moon? For bestselling author Joseph Moore, it was an experiment for his book How to Get Rich in American History.

On a recent episode of The Long View podcast, he told the story of another foray into real estate investing that was more terrestrial—and terrifying. He described encountering human trafficking and hoarders, and a tenant who pointed a shotgun at him.

In the podcast excerpt below, Moore discusses his landlord experience and how he became a millionaire.

Failing Upward in Real Estate

Amy Arnott: Another adventure you had was investing in real estate, owning and renting out homes, and you, as a landlord, had to deal with hoarders, human traffickers, squatters, the FBI. Does the real estate industry kind of undersell how difficult owning real estate and being a landlord really is?

Joseph Moore: Of course, because otherwise who would show up to the seminars? My book is not an advertisement for real estate investing, although it worked out well for me.

I tried so many self-experiments in this book. I Airbnb’d all the rooms in my house because, believe it or not, that was how Americans paid off their mortgages. That was the primary financial advice about how to pay off your mortgage early, was to rent out rooms in your house for a long, long time. One in three Americans at any given time was a landlord for most of history because they were trying to pay off their house. All kinds of crazy stuff. I bought land on the moon because that was a big rage in the early space era, people trying to claim they owned the moon.

But one of the things that came out of World War II was a housing shortage. It’s hard to believe today, especially, but believe it or not, housing shortages were pretty rare in American history because you could build pretty fast. But coming out of World War II, there was a housing shortage, and because of that, people who had housing, especially rental properties, did really well. And so then the first one of these to write a book about it in the 1950s, called How I Became a Millionaire in My Spare Time, became a bestseller. People started teaching courses on real estate investing, how to get into it.

That’s a pretty low inflationary environment in the ’50s and ’60s, but then in the late ’60s and ’70s, inflation just explodes upward, and so does real estate investing. People are rushing to try to buy a house with as little money down as possible and to teach other people how to do it. By doing that, the logic is, well, if the house is going to go up by 10% just because of inflation and you put down very little, you get the entire gain on that house, and the return on your actual invested capital is huge.

There’s this race to the bottom on this that becomes darkly humorous, so that by the early 1980s, there’s actually a book that sold pretty well that told people to not only buy a house with no money down, but also buy it when you actually have no money in your checking account. But at the closing table, they’ll hand you the security deposits for the renters, the tenants, and you can rush to the bank. Keep in mind, this is the ’80s; you’re not doing this on your phone. You could rush to the bank and deposit it before your check clears, and then you basically kited the check, put the money in. It’s, by the way, illegal. Can’t do that. It was illegal then; it’s illegal now.

Well, anyway, in this idea of I’m going to try out everything they tried then, I decided I would try little money down real estate investing again to try to show people what it’s like to try to do what they did now. I tried this, of course, in the post-2008 crash. In the early twenty-teens, going around in real estate investing, if you look at it back today, people were like, “Well, duh, of course you made money.” I promise you it was not as easy as it sounded. You could find houses for really cheap. You couldn’t find people to lend you the money. The people living in those houses, especially working-class houses, were people who had their own issues that they were dealing with.

I went out to buy a house, went looking in a corridor outside of Charlotte, North Carolina, and I ended up buying a house and a four-unit apartment building. I came home, and my wife was like, “I said you could buy one.” I was like, “Well, it was a good deal.” I don’t know, they talked me into it. We renovated the house, and a woman came out of the woodwork and said, “I’d love to rent it. I already own a home. I just have to move for work for a few years.” I was like, “Oh, this is great.” We never saw her again. It turns out she worked for a temp agency that was managing the lithium mines of North Carolina where they were importing illegal labor. Before I knew it, 40-something Haitian immigrants were living in my one three-bedroom house.

I went to the cops, who went to the FBI, and they said, “Look, this is a human trafficking ring. You can evict them if you want, but we’d really appreciate it if you’d let us sit on it so we could stake it out and kind of track it.” I grit my teeth and said, “That sounds like what I should do.”

Before I know it, I’m on a conference call with the FBI, and they’re raiding my rental property. By the way, all of those renovations were destroyed because you just can’t have 40 people living in a house with three bedrooms.

‘This Is Probably as Bad as Real Estate Investing Can Get’

But in the apartment building, I had hoarders, which then meant we had rats, which meant that the rats from the hoarders were getting into the other apartments. I had to go, and I politely informed them, “You can’t do that here. Your neighbors are suffering because of what you’re doing.” They promptly pulled a shotgun on me. I distinctly remember leaping off the steps, trying to run to my car with a shotgun pointed at my back that had just a second ago been pointed at my belly. Instead of thinking about my life and my children, all I could remember was this old rock song: “Give me three steps, give me three steps, mister.” I’m just running for dear life, thinking about this old rock song my dad used to listen to.

As I’m driving away, I finally thought, I may have made a mistake. This might not be for me. But I sat down, and I thought, well, this is probably as bad as real estate investing can get. So, what if I run this like a business and see what’s the upside? Over time, I just got really good at it. It helped that I was raised by a dad who was an electrician, and therefore I knew that what I owned was not homes, but what I owned was 2x4s and electrical wire and pipes. I kind of understood intuitively what to do when things went wrong, but I also just kind of decided to eat my own cooking. What was the one lesson of history to get ahead? Concentration, and then diversify. You diversify at the end of your life, not the beginning. I decided I’m going to go all in. I’m going to concentrate and see if I can make a million dollars. And to my great surprise, I overshot and one day looked up, and I was like, “Honey, I think we’re millionaires.” It kept going and kept going, and eventually I was able to just say, “All right, I can just sit at home and write.”

It was an interesting experience. I have failed upward as an academic into a place where I never thought I’d be.

Listen to the Full Episode

That’s just an excerpt from a recent episode of The Long View, but you can listen to the full conversation below (or read the transcript at this link).