Rumblings

As my holdings grew, I began to ask myself why I was doing all this. It was exciting but time-consuming added to my regular job. Laura was still home schooling but as the kids were growing older, she was getting to subjects that were getting beyond her. I was already helping with the more advanced math but I felt it would be nice to be able to help more. I decided that my goal would be to get to a point to be able to quit my dent job for the real estate so I could stay home to help with the home schooling.

I met another investor/property manager in North Carolina who helped me buy another couple of cheaper places that he managed for me. I did these without my partner, which meant I had to come up with the cash. Laura had really good credit and that got her really good deals from credit card companies. 

There were a lot of 0% introductory offers so I decided to start working with that money. As they were only in her name, the debt wouldn’t count against me either. This arrangement felt a little icky and Laura wasn’t too pleased but I was so driven to build my business, I pushed aside any misgivings.

For my dent work, I also had to travel to another town in Virginia called Petersburg. There was an army base nearby that I heard was going to have a huge expansion. I thought that would be a good place to start investing. They also have a university that usually provides a good source for rentals.

Petersburg had previously been a booming tobacco area but has since fallen on hard times. There were a lot of cheaper places. I found a duplex that was run down and uninhabited that I could get for a great price. By this time I had completely run out of cash so my partner put it all up. I got it fixed up and found a company to manage it.

One of our other property managers also offered us another place that he decided to pass on out in the country which my partner also fully financed. Although it was cheap, the house was sunken in the middle. The property manager assured us that we could get it jacked up and all would be good.

By this time it was 2008 and there were rumblings of impending problems in the economy. One of our renters asked me about it one day and I said that I thought, if anything, things would go sideways rather than down. Then we heard that one of our real estate investor friends was divesting himself of all his properties. I thought that was probably a bit drastic because if nothing happened, he would be losing a lot of money.

I continued to work on buying more houses in Petersburg, even to the point of putting down a good-faith deposit on another. As my cash had run out, I was starting to look into what are called hard-money lenders. These are unregulated companies that have a lot less stringent rules than banks but charge you a much higher interest rate to make up for it. Again, it felt a little icky but I was blowing past any red flags in my quest to succeed at what I believed was God’s direction for my life. 

The renters in the house in my neighborhood decided not to renew their lease. With the direction we saw real estate and the economy going, we decided to sell the property. At the same time, my partner decided to sell another property of his own that he had been renting out, not too far from our mutual one.

We got an offer and a contract on the house in my neighborhood from a woman who was moving down to our area from northern Virginia. Then my partner also got an offer on his house from a woman with the same story. Unbeknownst to her, we were using the same lawyer and as we compared notes, we discovered it was the same person who had contracted for both houses!

Our lawyer said that she would confront her about it, hoping that we could scare her and make her lose one of her good faith deposits. When she did, the woman said that, with what she had made on the sale of a house in northern Virginia, she could buy both. We didn’t really buy it but there was nothing we could do. 

My neighborhood was in a homeowner’s association (HOA) and the rules for selling a home in an HOA in Virginia are such that the person could back out of the contract up to three days after receiving the HOA documents. We suspected she was going to use that clause. It was frustrating because her contract tied up the house and took it off the market. We were losing money every day.

Sure enough, three days after she received the documents, she cancelled. We quickly listed again and were able to sell with a reasonable profit in the end. But that wasn’t a very nice experience.


Comments

  1. Curtis NaugleSeptember 23, 2021 at 7:31 PM

    Do you still invest in real estate and what do you think of the current market. Is the bubble going to pop? Real estate investing has been a dream of mine but I have yet to find my first investment deal. I'm thinking of waiting until the market drops a little to purchase my first investment.

    ReplyDelete
  2. Stephen WilliamsSeptember 24, 2021 at 5:12 PM

    I just posted my next blog about when everything fell apart. I have no clue on the present market conditions.

    ReplyDelete
  3. On A Hot Tin RoofSeptember 25, 2021 at 12:05 AM

    Curtis, Clay (& I) own rentals but Clay will tell you he only does them if he goes into them debt free. Clay will not have consumer debt hanging over our heads. It hs really been a great policy to have…at times it has annoyed me to no end but in the long run it has afforded us opportunities we wouldnt have had otherwise…with helping others, providing for our kids & preparing for the future. We have been fortunate & are very blessed. We did not despise our small beginnings

    ReplyDelete

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