Every morning when I head to work the sun is shining so bright on a certain street that you literally can’t see where you are going. You can’t see if a car is going to pull in front of you and you can’t see anything until you get to the end of the street. So when this happens I pull off to the side of the road and do nothing until the sun gets out of the way.
Psyche. How foolish does that sound? It sounds ridiculous. I push through and I do the best with what I can see, I squint, I use the shade and a drive a little slower but I keep pushing forward. If we are all honest, we all do something similar when it comes to our jobs. When it comes to our jobs we find a way to make it there. The same should be true when we are investing or buying property.
This week in real estate investing we hit a patch where we can’t see the end and in all honesty I have chosen to stop and sit on the side of the road. We are in a bind where the original estimate we had and agreement we had with our last contractor are unworkable because our last contractor is in jail, with possession of about $1000 worth of our materials (cabinets, counters, floors).
What does this mean? This means that we have to find new contractors, contractors that we don’t have a global relationship who are less inclined to give us the great price that our prior contractor gave us. A tip here is that when you own more doors economy of scale kicks in on your repairs as well. Contractors are less inclined to gouge you on everything if you give them consistent work across multiple properties.
Yesterday I realized that I can’t sit still, I have to keep moving forward and that is why we are moving forward with what we have knowing that as the project improves we will see clearer but if we stay where we are our view will never improve.
One thing that is interesting about real estate is that sometimes you don’t know all the answers at the outset or even in the middle of a project. Sometimes you need to sit and think for a week and then come to a good answer. This is why sometimes when I get questions from members I don’t have the best answer. These are thousands of dollars we are dealing with and to expect to have the precise answer on the cuff at all times is just unrealistic. I never promise that I have all the answers I only promise that we put investors and partners first. The overall long term, 3,000 foot view is the goal not the minor details.
The main point of this blog is that we have found what we like and what we don’t like in the first year of doing this.
In doing this we have found that our best properties are the ones with the tenant occupying them when we buy them. This is rare. But it is a golden opportunity. Why? Well most people are looking to flip not to be a landlord so this decreases demand which decreases the price.
Often times tenant occupied properties are under priced, really under priced. This is for several reasons, it can be because of the landlord deferred maintenance, it can be because of their under market rents which drag down the roi which drags down the value, it can be because they are just tired and are willing to sell or that they own the property free and clear. There are a lot of reasons why, but we have found that of all the tenants, the most stable and long term are those that have lived in property for five years, not five months. This is why I specifically target these people.
A lot of investors and wholesalers want to know what works best for them before they buy something. They want to bat 1000 and they don’t want to lose money. This is great for sideline watchers but not for people who really want to win. Some people want to be smart on the sidelines and are unwilling to risk being wrong in the game. Being wrong and pushing through wrong are how you win though. That is how we found what we like.
I encourage you to invest with us and join our partnership. We are doing a great work and if we keep up the pace we can be into twelve doors before the middle of next year.
If you are interested in investing with our club on either the stock or real estate side we would be happy to welcome you into the partnership. Email firstname.lastname@example.org today to join.
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Thanks for reading!
Be great, invest well,