“No problem,” Sam told Mrs. Dee, for the first of many times. He found a sixth house that was walking distance from the bars downtown. It was only $19,000. She liked it. But then changed her mind the next day.
“Mr. Zell,” she informed him, “my husband and I decided that we don’t want my brother to live with us in the house anymore.”
“No problem,” Sam told Mrs. Dee. He began to give her alternatives. Sam offered to fix up the apartment on the second floor, where her brother could live alone. The problem was the stairs. A drunk can’t manage climbing the stairs.
“No problem,” Sam told Mrs. Dee. Sam consulted with the contractor and came up with another alternative. The basement provided the perfect apartment for Mrs. Dee’s brother. He’d be able to walk down five steps and be home. The apartment upstairs she could rent out for extra income. She agreed.
She changed her mind the night before the contractor started on the project. “Mr. Zell,” she informed Sam, “My husband and I decided that we can’t have my brother living in the basement. It’s not right. We’d feel guilty.”
“No problem,” Sam told Mrs. Dee. Sam proposed building a one bedroom apartment extension onto the house, side by side. He offered to design it so that if her brother stumbled through the front door and kept going, he’d end up in the shower. She loved it.
That completed Sam Zell’s acquisition of the last parcel he needed to own the whole block. The lesson? Listen to the other person. Have tactical empathy. Out of the many things they tell you, understand what is a deal breaker. Keep pushing through to completion.
Last week on Methods of Prosperity
Money itself has no intrinsic value. USD is a fiat currency. Only by government decree does it have any value. It’s not backed by physical commodities like gold. The Federal Reserve influences the economy by printing money. They control the money supply and interest rates. This system allows banks to create money through loans. That’s how money comes from nothing. Wealth isn’t about numbers; it's about value creation. Which is limitless and doesn’t equate with hours worked. Sam Zell’s story exemplifies this notion. His parents taught him that economic success equates to freedom. He pursued law as a profession but became a successful real estate investor instead. While in law school, he purchased real estate properties until owning entire blocks. He learned valuable lessons about human nature and negotiation in the process. He encountered a situation with a seller who owned the last property in the area that Sam didn’t own yet. He was a wealthy man from Chicago. His niece lived in his house. Her name was Mrs. Dee. The house was a hundred years old. Sam found five houses three times better, but she wasn’t interested. Why? Her brother was a drunk who went to the bars every night. He lived with her and her husband. The better houses were too far away from the bars. Her brother’s need to be near local bars was an unforeseen factor that complicated the deal. This phenomenon is called a “Black Swan”. It’s a metaphor for the unknown unknown that blocks negotiations. This situation with Mrs. Dee made Sam aware of unexpected obstacles. Success often requires understanding the unanticipated elements that can impact outcomes.
The following is Methods of Prosperity newsletter number 77. It was originally deployed December 05, 2024. As of August 14, 2025, original subscribers have received up to Methods of Prosperity newsletter no. 113: Jesse Itzler.
Methods of Prosperity newsletter is intended to share ideas and build relationships. To become a billionaire, one must first be conditioned to think like a billionaire. To that agenda, this newsletter studies remarkable people in history who demonstrated what to do (and what not to do). Let me know how I can help you out. For more information about the author, please visit seanallenfenn.com/faq.
Part 77.
Key Lessons:
Wealth is compounding relationships.
Keep pushing through to completion.
Your success may offend someone.
Make the best use of your time.
Gain specific knowledge.
Use tactical empathy.
Be unemployable.
It was 1966. Sam graduated from the University of Michigan Law School with a J.D. degree. He graduated in the top quarter of his class. It didn’t make sense to him why he couldn’t get a job at a law firm.
Until one day, Sam landed a meeting with the Senior Partner of a law firm in Chicago. His name was Charles Kaufman. “Tell me about your deals,” he said. Sam was there for a job, but Charles explained why no law firm would hire him. “We’d never hire you. You would last six months and then go back to doing deals.” Sam Zell was unemployable. He was a deal guy.
Later he did get a job at a small law firm and only lasted four days. On the fifth day, he told his boss that writing legal contracts wasn’t a good use of his time. His boss arranged for Sam to stay and do deals for the law firm. Sam would have 50 percent commission of any legal business he brought in. They didn’t expect Sam to bring in more business than they could handle. Within four weeks, he was bringing in too much new legal work for his deals. They reduced his commission to 35 percent. Within the year, his cut was down to 25 percent.
Eighteen months in, at the end of December that year, a Junior Partner called Sam into his office. He was angry that Sam was making so much more money than him. This guy was practicing law, working 80 hours per week, and making $25,000 per year. Sam was a young 25 year old kid making more than three times that. It was a revelation. For the first time, Sam recognized that his career was not typical. That’s when he decided to leave that law firm.
Sam set up shop in a spare office at his brother-in-law’s law firm. It would be the precursor to Sam’s investment firm. His investment thesis was to target small, high-growth cities. He would avoid competing capital. The opportunity was in buying apartment buildings in university towns. Taxes and utilities were lower in these second-tier cities. Net margins were higher. He had around 20 investors, including his father and some of his colleagues.
His first acquisition was a 99 unit apartment building, University Park Apartments. Valued at $1 million, the location was across the street from the University of Toledo, Ohio. Sam believed the yield on this deal would be 19 percent. He brought the opportunity to his father. A property manager reviewed the deal, projecting an eight percent return. The asset produced cash flow right away. It ended up producing a 20 percent return. For Sam’s next deal, the same investors lined up, and the line continued around the block.
From Toledo, Sam went into Tampa, Orlando, and Jacksonville Florida. Arlington Texas and Reno Nevada followed. His deals became more sophisticated. The greater the return, the greater the risk. Sam made bigger and bigger deals. The risk became more than his father was comfortable with. Sam’s father declined further investments after a while. The Reno Nevada deal produced a 19 percent cash-on-cash return. That’s income earned on cash invested, excluding appreciation. It was a high rate of return which balanced out the risk.
You’ve heard that real estate is a relationship business. That’s true. We’re looking to do deals with people we have long-term relationships with. Compounding relationships is the name of the game. We don’t play limited, finite games. We don’t do business with short-term money people. For example, wholesalers that buy and sell contracts for single family homes. We play infinite games. For example, we want to do deals with trustworthy people with whom we’ve had a relationship for decades.
Sam had become a successful real estate entrepreneur with a law degree. This gave him specific knowledge. Specific knowledge is deterministic.
“If you’re a trusted, reliable, high-integrity, long-term thinking deal maker, then when other people want to do deals but they don’t know how to do them in a trustworthy manner with strangers, they will literally approach you and give you a cut of the deal or offer you a unique deal just because of the integrity and reputation that you have built up.”
Sam knew he didn’t want to work for anyone. He didn’t need to. But there was one person who would offer him a job in 1969 that would impact Sam’s career.
To be continued...
I like you,
– Sean Allen Fenn
PS: Notice there’s only one action for you to take. The purpose of wealth is freedom. You can have financial freedom, but not by yourself. That’s why we’re building our core group of people. It’s a community to help each other achieve financial freedom. One way is by pooling our resources to invest in Multifamily real estate together. Whatever method of prosperity you choose, don’t go at it alone. You can now join our Methods of Prosperity community on Telegram here:
Sean Allen Fenn
Support dialog
