For Monday - please read the Joe Becherer article. Be ready to talk about it in class. The article is below. If you don't already have a copy, then highlight and copy to a word document. Then print out a copy for your Binder. Put it into the Reading and Handouts section.
Building a fortune: At 25, man is on his way
Posted: Sept. 12, 2004
When Joe Becherer was about 5 years old, he'd pretend he was a bank teller. He loved playing with money. He still does.
Becherer wasn't a born investor, but he comes close. He was the kid who socked away his birthday cash rather than rush to the toy store, the one who got curious about the stock market by fourth grade, the one who realized the power of compound interest before he hit his teens.
At Marquette University High School, some of Becherer's free-spending classmates snickered at his thrifty ways. Dork, they thought. Some dork.
Today, at 25, Becherer sits on about $2 million in Hawaiian real estate. His equity in the properties totals as much as $750,000. He has an additional $100,000 in investments and cash.
And he has amassed almost all of this as a sideline to his full-time job - as a U.S. Army first lieutenant, one who oversees his little financial empire from Afghanistan.
"Joe's always been the entrepreneur," said his father, Jeff, a Wauwatosa dentist.
Indeed. Sitting one recent week in the light-drenched kitchen of his parents' home along the Menomonee River Parkway, while on leave, Becherer described his evolution from financially precocious child to aspiring real estate baron.
He was about 8 when he got serious with money. His grandparents had given him a birthday check, and he spent it all on Transformers, the toys that change from robots into spacecraft, helicopters, weapons and such. It was what he really wanted.
"After about a week, I lost interest in them and never touched them again," Becherer said. "I think that was the first point in my life where I realized that I was going to be frugal with my money."
So he started saving. Birthday loot, money from a little necklace-making business, cash from baby sitting - Becherer was careful with all of it. He began with a savings account, then graduated to mutual funds. By the end of high school, he had $15,000.
Then it was on to the U.S. Military Academy at West Point. Cadets get a $600 monthly stipend, which, after required expenses for such things as uniforms and fees, nets out to $250 to $300.
Many of Becherer's friends spent their money ordering in food, buying compact discs and taking trips to New York City. Becherer invested it all.
"I had very simple desires," he said. "I didn't spend much on anything."
He also found he could make a few bucks collecting used textbooks and selling them to an Internet-based bookstore. And he turned his company store - most companies of cadets keep a store where they sell snacks in their day room - into the Wal-Mart of West Point.
Hawaiian property
But it was after he was assigned to Hawaii that Becherer's business instincts really began to blossom.
He wanted a place to live, and decided to buy a house.
Thanks to his frugality and to his parents, he had the wherewithal to play even in pricey Hawaii. Using $45,000 of his savings and $40,000 from his parents - money they would have contributed to his education had he not gone to West Point - Becherer bought a $422,000, five-bedroom home in 2002.
To swing the mortgage on the ocean-view place, he drew on rent from friends who lived with him.
A year later, Becherer was ready to dive again into what was becoming a bubbling real estate market. Demand for homes in Hawaii had grown so high that buyers were camping out to be first in line when new lots opened up. Developers started holding lotteries on home sites. Becherer put his name in for a lottery at one new development and, a few weeks later, learned he had won buyer's rights.
There was one hitch: By then, Becherer had been dispatched to Thailand for three months' duty. No problem. Friends advised him via e-mail on which specific lot to buy, and a roommate to whom Becherer had given power of attorney signed the contract for construction of the house. The house was completed in January 2004 and was rented to two friends. By then, Becherer also had purchased his third house, a $560,000 model townhome furnished in a Hawaiian resort motif.
Collecting rent
Becherer plans to move into the townhouse when he returns from Afghanistan next year. In the meantime, it's rented, as are the other two places. All told, Becherer takes in about $8,500 a month in rent - more than covering his $7,700 in mortgage and home equity loan payments.
A property manager oversees one of the homes, while friends and neighbors keep an eye on the other two. While Becherer has been dispensing payments - always in cash - for U.S. military activities in Afghanistan, his Hawaiian nest egg has been growing nicely.
The sales manager in the development where his first house is located told him it probably could be sold in a week for $700,000, and that the second house could bring $650,000. Becherer estimates the current value of the townhouse at $650,000 to $700,000.
"It's to the point where I almost feel I should sell because I think things are getting so irrational," he said of the surging Hawaiian real estate market. But hard as it is to do, Becherer intends to stay the course and regard his property as a long-term investment. Besides, he said, he doesn't have any better place to put his money at the moment.
Becherer, who majored in economics at West Point, will leave the Army in June 2006. Three months later, he wants to be enrolled in Harvard Business School, pointing toward a career in commercial real estate development and management.
And he has another goal. He wants to teach elementary and high school students the financial planning principles he grasped early on - particularly the power of compound interest, which Becherer believes can be life-changing.
"One could do much good by teaching some relatively simple concepts to people of that age," he said. "With potential problems for our Social Security system down the road, this is a small way to serve the best interests of our country."
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