By Thomas Heath
Monday, September 8, 2008
Staff writer Thomas Heath's Value Added column appears Tuesdays on the WashBiz Blog. Most weeks, it profiles local entrepreneurs, discussing how they make money and what they do with it.
One of the books I frequently pull off the shelf is a biography of Charlie Munger, the co-chairman of Berkshire Hathaway and Warren Buffett's sidekick. (Berkshire is part-owner of The Washington Post Co.)
The book, "Damn Right," has a couple of inspiring nuggets. My favorite: Live beneath your means so you have some money to invest and make that first million. It made Munger a billionaire.
The same strategy made Betty S. Gardner and her husband, Joe, rich as well. They may be the least-known real estate moguls in the Washington region.
"We live very modestly," said Betty Gardner, who celebrated her 78th birthday last week. "We don't publicize our wealth. We are charitable people, and we give anonymously to most things."
Betty, Joe and their partner Norris E. Mitchell own close to 1,000 apartments and townhouses throughout the mid-Atlantic under Gardner Homes Realtors. The partners also own a profitable Comfort Inn on Glebe Road in Arlington County, about 600 acres in Fauquier County, half of a 10,000-square-foot warehouse in New Carrollton and 800 acres close to a golf course project near Roanoke.
The Gardners personally own a 500-acre farm in Orange County, Va., a 10-bedroom house on the Outer Banks and a condo in Myrtle Beach, S.C. But they still live in the same McLean house they bought for $88,000 four decades ago.
I estimate the Gardners are worth between $50 million and $100 million. They have grown from a single rental house in McLean into a sprawling real estate empire -- all by living on less than what they earn and investing the savings in real estate.
It's a wise policy.
It started almost by accident. Betty took a real estate course with a friend back in the 1960s, when Joe was working as an engineer for McDonnell Douglas. Two friends approached her and asked her to join their start-up company in Northern Virginia.
"I was a homemaker and proud of it, and almost ashamed I was getting into the business world," Betty said. "I was very interested in money. I kept getting pulled into it. I got pregnant and tried to drop out."
But when her friends approached her, Betty said, "I had very little experience, but I thought: What did I have to lose?"
Betty and her friends each invested $500 in the business. Betty would drop off her 3-year-old off at the nursery and head to the office, where she would sell real estate for three hours before picking up the child before noon.
After her two business partners left the area, Betty Gardner took over the firm.
The Gardners' four children went to public school and Betty's real estate earnings went toward the purchase of investment properties, with Mitchell, one of her husband's friends, as a 50-50 partner.
"Everything we pulled in, we turned into real estate," she said. "It didn't take that much to save up because homes weren't that expensive."
The Gardners and Mitchell started gradually, buying and selling a few detached homes in McLean. In the early 1970s, they bought an eight-unit apartment complex for around $75,000. They paid as large of a down payment as they could afford and the seller loaned them the rest.
"We worked out payments where we assumed the [seller's] loan," Gardner said. "We always looked for assumptions so we didn't have to go to banks for the money."
Gardner said the current downturn presents opportunities for smart real estate buyers. "People have dropped their prices, making it more realistic for buyers," she said.
The Gardners have also ventured out of real estate. They were one of the early investors in Virginia Commerce Bank back in 1987 and now own around half a million shares. Mitchell is on the board of directors.
"We have worked hard and are thrifty people," said Gardner, who drives a 2002 Chrysler Concord. Her husband drives a 10-year-old Ford Navigator. "We never had anything given to us. We have done what we have said."
Betty still runs her Gardner Homes Realtors in McLean, and the partnership with Mitchell, MG, has expanded from simply owning apartments to managing apartment complexes for others.
"We have never bought to flip," she said. "We try to buy at market value, and real estate has historically gone up. So if you hold it, it's going to grow for you. That's what happened here in Washington, and we grew with it."
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