Real Estate

Chapter Eighteen –Rise and Fall

I went out to that fire and proceeded to engage in what became the fateful conversation with a house builder from our church. As we discussed the housing market, he encouraged me to get involved in real estate. I already had a little experience as we were renting out the town home. Now I started looking around at the wider market. I also began devouring any real estate books I could get my hands on.

I talked to my accountability group about the idea. Most of them were encouraging or neutral but there was one guy who warned me against it. He had watched his father fail at real estate investing and it had soured him on the whole arena. I listened to his advice and promptly…blew it off! Laura also had misgivings. She’s not really a risk-taker so it made her nervous. But because of that conversation by the fire, I believed God had sent me in this direction and because of that, I believed I was going to succeed.

There were two options – flipping or holding. There are strategies for getting properties at the lowest possible price to give you the best possible return but I didn’t have the experience to know how to work those deals yet. However, with the way the market was going at the time, it wasn’t hard not to make at least some money, even if it wasn’t the best possible margin.

I began to look around some of the cheaper, older neighborhoods in town where I could find something more affordable. I found one just across the river from downtown Norfolk where I heard there were developers planning to build high rise condominiums. I thought that would raise the price of the neighborhood as it started to go upscale.

I found a place just below market where I decided to do some basic repairs to make it habitable and rent it out. I would bank on making money in the long-term. A friend decided to go into with me, splitting the costs and profits 50/50.

I did the repairs and advertised for renters. Because of my cheapskate ways, I didn’t want to pay the money to get the tools to really screen potential renters. I just met with people, got proof of income and went on a hunch. I did research how to handle rentals right, with tight rules and quick notices for late payments. If the non-payment continues, you send legal notices of eviction as quickly as possible because it takes a while to legally get renters out. Because the house was in a poorer neighborhood, I knew the renter pool would be potentially sketchy so I had to have all my ducks lined up.

I rented to an older woman who had just got a job at the new grocery store nearby. She was going to live there with her son. I don’t think she was even in there a year and over the course of that time I sent her many late notices and several certified eviction for non-payment letters. She would often go a few months late but catch up before eviction. I was never mean about it. I just had to cover myself and be efficient to protect my investment. I wasn’t rich and didn’t have the resources to cover any shortfall.

Ultimately, it did go too far and I did have to evict her. Besides non-payment, she had also broken rules about others who were living there who were not on the lease and there was smoking in the house. Her son came to court to defend them but he even acknowledged to the judge how fair I had been in all my dealings with them. So began my experience with the time-consuming hassles of rentals.  

Despite the headaches, I continued to troll some of the poorer, older neighborhoods looking for potential places to invest in. I even hatched a plan to get several guys together for an investor group. We had a couple of meetings but thankfully (for reasons that will become apparent) it never went anywhere.


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