Tag: Real Estate

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My Cup? Still Half Full With Holes

Like billions around the globe during this public health Covid19 and economic crisis, the insatiable desire to see friends and family is real. The exhaustion is eye-dropping heavy by the end of the work week. The at-home meals are becoming too repetitive. The Zoom and WebEx meetings are not as much fun, and in fact, a bit of a burden now. The walking route is starting to get a bit stale, since the beach is not open. Getting dressed up, going to the office, and the feeling of helping others are all missed deeply. And as an owner of a real estate company, this market is challenging sellers and buyers to stay true to their contracts; it’s also challenging bankers, appraisers, and title companies to make solid decisions that benefit all parties.

Yes, there are lots of holes, but my cup is still half full. And if you own real estate right now, be resilient and keep your cup half full. Let me share with you some examples of having a real estate part-time gig, while you work a full time role.

In early April, five of my eight rental homes were damaged by hail and wind storms. My primary home in Indiana was also damaged in that same storm. So let me get this straight: I have six storm damage claims, in the midst of COVID19? Yes, Jen, you do. However, your cup is still half full because you invested years ago, own these homes, and you have insurance. Life happens. Storms happen. That’s why you have insurance.

This past week, a huge tree at one of the rental homes was not showing it’s normal Spring green growth. So let me get this straight: I have a dead tree, that could fall on one of the rental homes and potentially a neighbor’s home? Yes, Jen, you do. However, your cup is still half full because it’s only one tree. All the other trees are alive, blooming and bringing their Spring green colors of hope. The dead tree was removed quickly, to help ensure no further damage. And that tree contractor was thrilled to have the work.

In the last couple days, two of our clients (tenants) have reported that their dishwashers are not working. Is that because of anything that I did? Of course not. Maybe too much food in the drain or a forceful push on the top plastic rack that broke it? So let me get this straight: Two dishwashers aren’t working now, during COVID19, when most families are home cooking 1-3 meals/day, and it’s my responsibility to fix these dishwashers? Yes, Jen, it’s yours. However, your cup is still half full because these families feel secure enough to call you and ask for some help. And we did help them; the dishwashers are back up and running again.

The locusts didn’t show up, but the termites, roaches, racoons, and mosquitos did all at the same time in our new Florida home. In all my years of owning real estate, I’ve never had termites. So let me get this straight: You have tiny critters trying to eat up your home? Yes, Jen, you do. However, your cup is still half full because the previous owner had a termite bond, so the pest control company quickly came out to address the issue.

On March 16, we high five’d as I accepted an offer to sell my primary home in Carmel, IN, for nearly the listing price. Committed to help ensure this sales contract closed easily by early June, I spent over $6,000 to address items on the inspection report the first couple weeks of April. And then fast forward to the past two weeks. Both appraisals came in and were $45,000-$70,000 lower than the sales contract price. So let me get this straight: this home of mine that had 20 showings in 48 hours back on March 14-16, the sales contract has now blown up because of two, low appraisals? Yes, Jen, that’s right. However, your cup is still half full because there are other families who will want this home, and one of them will live there happily ever after. And, don’t forget, you are remodeling another rental home, so it actually gives you a bit more time to thoughtfully get that done, while I re-list and market my primary home again.

On Valentine’s Day, I signed a contract to sell a building lot to a young family, only to find out that the deal couldn’t close recently. Why? The previous owner of the lot, an unnamed Christian college, deposited my money back in Feb. 2019, and yet did not release the lot from the mortgage. So let me get this straight: I buy a lot in 2019, go to sell it in 2020, and the paperwork still isn’t ethically processed correctly? Yes, Jen, that’s right. However, your cup is still half full because on April 10, you did sell the other two homes that are next to the lot. Those two deals were 20x’s the size of the lot deal, so keep it in perspective.

In mid-March during a routine HVAC check up, learned that one of the steady-eddy rental homes needed a new furnace, immediately. So let me get this straight: I buy the HVAC maintenance plan, and it turns in to a $3,450 new furnace? Yes, Jen, that’s right. However, your cup is still half full because the air conditioner was just fine, the new furnace is safer, quieter, and more efficient for the long-time tenant. She deserves that, as she rarely complains. And you just upgraded your home’s value.

The USA government announced numerous programs in early April to help the economy, individuals, and small businesses. The Paycheck Protection Program was touted to help small business owners, like me. After I filled out the paperwork for an EIDL loan, I was informed that I might receive $1,000 for the two $10,000 applications that I filled out. So let me get this straight: 50% of my clients have incurred lost wages, I am discounting rent by $200/month and also allowing late payments, and yet I get zero assistance from the USA Government. Zero? Yes, Jen, that’s right. However, your cup is still half full because all of your clients have paid rent, and are communicating proactively with you. They are making it happen, and for that I am grateful.

In early March, I was able to sell two other homes that had been non-positive cashflow drains on my business. So let me get this straight: you sold two homes the week before the COVID19 “stay home” social distancing all started? Yes, Jen, you did. My cup is beyond half full because of these two deals actually closed in-time and on-time.

We good with all those examples? They clearly indicate to me, again, that my cup is half full with some holes. Be grateful. Be resilient. Real estate is one of many ways to make a living; it’s a comforting feeling to provide housing for others and watch it change their lives. Yes, Jen, that’s right. It does!

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Start A Business at 49? Yes

My great grandmother (GG Kate) immigrated here in the early 1900’s, when she jumped on a ship and landed in the USA from Lithuania.  As a teenager, she had the courage of a lion, to leave her family and country, and go abroad. She lived in East Chicago and bought apartments one by one, and then bought the entire building(s).  During the early 1970’s when our family traveled to Daytona Beach, FL, we visited my great grandmother.  She was a woman entrepreneur,  living near the beach, and a  good story of immigration done right.

Fast forward approximately 100 years from when she fled Lithuania. It’s now 2013. When you’re 49 years old,  and you want to start a real estate business, well, you just do it.  You courageously, just like your GG Kate, buy some properties, evaluate, buy and sell more, and now five years later, you have a profitable business that serves others in a very desirable community. And serves my bucket list of travel, enjoying life, and helping others.

Here are some TIPS on what TO DO as you start a business, and what NOT TO DO:

  1. Prep: Walk, think, look, inspect, read, listen. Before I bought my first three homes in the same week in June 2013, I walked the streets of downtown Carmel, looking at traffic flow, understanding prices, learning about infrastructure, asking other landlords how to be landlords, etc. for 18 months. NOT DO: buy properties based on emotion.  Instead, make business decisions.
  2. Draft: While in bed one evening in April 2013, I hand-wrote a business plan on one piece of paper. It was short, to the point, and gave me great clarity.  In short, it stated, “Provide homes with incredible walk-ability to shops, schools or restaurants. Be able to walk or jog to these homes. Focus on ranch homes for the safety of families and older clientele. Ensure that 10% gross income is achieved annually on your initial investment.” This draft helped me start my business and invest in homes the following 60 days. NOT DO: wing it, with nothing written down.  Instead, do the prep, plan, and then execute.
  3. Team of Advisors: Call an attorney familiar with establishing LLC’s, especially a law firm that understand real estate laws.  Not only did they help get the LLC going, but they provided me with a detailed and fair lease. Get a CPA who has other clients like you.  Align with a good realtor.  Find ethical and reliable contractors, and then pay them quickly. Establish a very strong relationship with at least two bankers.  Understand your own financial plan with your financial advisor.  NOT DO: Not willing to pay or slow to pay for advice and help. Instead, realize there is always risk with any business and pay for guidance, help and advice. Build your team by sharing your vision and business plan.
  4. Work: On a downright yucky/rainy/cool Sunday in Spring 2013, I walked the streets of downtown Carmel.  When open houses were cancelling that day, I was out there working.  In the next week, my realtor helped me on offers, buy and close on three homes within 1/2 mile of each other. NOT DO: Rest, assume others will find the homes and do the work.  Instead, YOU do the work.
  5. Adjust: Of the 3 homes, the first home was rented quickly. The 2nd home was a ranch, but it was dated and had two bedrooms downstairs in a dark basement. The 3rd home was my personal home.  Adjusting quickly, I sold the 2nd home to a realtor and cleared a few thousand dollars, thank the Lord.  And I sold the 3rd one, my own home, after I remodeled it and captured a nice gain 2.5 years later. NOT DO: Move slowly. Instead, when it’s the wrong decision, quickly own it and fix it. Learn from it.
  6. Care: Once you have a client (tenant), take good care of them.  Your first client should help you quickly learn what’s important to them/future clients. If a client needs something and it’s a reasonable request, do it quickly.  NOT DO: Ignore your clients.  Instead, remember they are paying you, providing revenue, so be thankful and aware of what feedback they are providing.
  7. Ask: The first home that I bought had a nice home next to it. So I asked the owner if he would be willing to sell it.  Timing was everything.  I got it bought before he put it on the market.  And then I asked my realtor about buying the messy/skinny/wooded lot on the other side of the first home.  Within a few months, I had 3 properties next to each other, directly on The Monon in downtown Carmel. Location, location, location. NOT DO: Wait. Instead, you will make the difference in your business. You are in charge of the decisions. No one else.
  8. Track: Once the business starts, track every single expense and revenue.  I set up a spreadsheet, put it in the cloud, and can view the status of all the homes from anywhere.  And I can share this easily with my accountant to assist with tax prep. Created folders for every home, for every receipt, for every year.  NOT DO: Fall behind in tracking expenses.  Instead, to be profitable, you need to know your revenues and expenses.
  9. Grow. Let others/neighbors/tenants/realtors know that you are a local business owner, looking to grow the business, wanting to buy more homes, etc. Good people will help you.  Be opportunistic, and buy distressed assets. And update your assets AND your business plan regularly. NOT DO: Get lazy.  Instead, keep learning, sharing, and growing.
  10. Buy Low, Sell High. Seems simple, but the lower priced homes with nice remodels or updates are the ones that are most liked by our clients and most profitable.  Sell them when you are comfortable with the gain.  NOT DO: Sell Low, Buy High.  Instead, be wise. Have a goal for your profits and then execute.

Since my grandmother came to America in the early 1900’s, she grew, learned, moved, and leveraged advisors.  GG Kate owned multiple properties, and even had a will in place when she passed.  Her daughter (my grandmother Bernice) and my paternal grandfather George owned real estate. And my mom and dad own land, as well. So one might say that I have a natural gene that’s called, “the love of real estate.” What’s YOUR plan to start YOUR business? Don’t let age, or being a woman, or fear stop you.  Instead, be courageous like a lion, execute with a plan, and make YOUR dream a reality, just like GG Kate did in moving to America. And then truly becoming an entrepreneur.