In 1980 the congress of the United States decided to allow the Savings and Loans to enter the Real Estate business. They began to buy land rather that finance purchases for their customers. They bought land, developed land, and built apartments and houses. They had in-house appraisers who would appraise the properties so the Savings and Loans could make huge profits. They put a lot of professional developers out of business and caused the price of land to escalate at a rate of 25– 40% each year. The demand for land was hot as a two-dollar pistol.
I began to acquire some farms and I would resell them to investors and to other companies. I would sell them with 10-15% down and a note receivable for ten to 15 years. I would take the Note Receivable to a bank and borrow on it to buy more land. The banks would loan about 75% of face amount on the notes. I would then buy more land and resell it. The buyers were lining up waiting to buy land and I finally had about four million dollars in notes receivable on Collin County land with the payers paying me about $300,000 a year in payments. My note payments at the banks were about $150,000 a year. We had a nice $150,000 spread that we enjoyed for several years.
These were the days that we were all wheeling and dealing as fast as we could. For example, one deal I did may give you a feel of that time. In 1980 I found a nice 25 acres that fronted on Central Expressway, just north of Hwy 380 in McKinney. The price was $250,000.00. I contacted the owner and started negotiations that lasted for about a week with me agreeing to purchase the 25 acres at his price with $25,000.00 down. There was a second lien of $30,000.00 that I agreed to assume. The balance of the purchase price consisted of a 20-year note at 10% with the first ten years being interest only.
A week or so later I was having breakfast with my sometimes partner Anthony at the truck stop in Anna and told him about my new deal. Anthony said,”I would love to have been in that deal, it looks like a winner.” I replied if you want it, half the deal is yours. That was the way we used to do deals in the “old days.” A man’s word and a handshake were better than any legal document. About two years later I had an offer $2,500,000.00 for the twenty-five acres. The deal was $500,000.00 down and a ten-year note for interest only and then the balance would be due. With the down payment, I paid off all the liens against the property and was able to deliver the property free and clear. At the closing I had the title office pay off all liens and then issue two notes Receivable, one made out to me and one made out to Anthony. Each note was for $1,000,000.00.
I told Anthony what I had done and he was delighted with the deal. After one year our buyer paid us our ten percent interest and sent two checks, each for $100,000.00. I gave Anthony his and deposited mine. I bought two other tracts of land with mine and Anthony started the People’s National Bank in McKinney with his, along with ten other investors. Another year passed and we got two more checks for the same amounts. During the third year, our buyer declared bankruptcy and turned the property back to us. This gives you kind of an idea of life during the Eighties, for all of us in the land business.
Image of intersection courtesy of Google Maps.