When things get tough, how do you stay the course?

Question

Hey BP community,

I started my investment journey about 6 months ago when I was able to get my first SF property. Since then, I have been able to obtain 3 properties. I have found myself in a slump lately, I'm not sure if that happens to anyone else but in some ways, I feel the motivation draining. I live on the West Coast and started my investment career in Canton Ohio, so for months I was waking up and living my life on the same schedule as Eastern time zone. I was waking up at 4am here (7am there) and getting everything that I needed done for the day so that when the workday in Canton started, I was on the same schedule as everyone over there.

Lately, I have hit so many brick walls, whether it comes to funding, finding deals, finding financing or whatever the case may be, I just have not been able to get anything going. I have really turned a lot of my attention to creative financing since I have spoke with well over 100 different lenders whether that may be local credit unions, DSCR lenders, hard money. If it's a bank, they won't loan to me because I have not been a consistent 1099 employee for 2 years. DSCR or Hard money won't loan on the properties that I have or are going after since the value of the properties are less than $100k. I went all in and refinanced my primary residence and used private money to buy the 3 properties that I currently have.

I do believe that if there is a will, there is a way. I think that I thought I was going to take the investment world by storm, and it turns out that doing this is not as easy as I had it in my head after podcasts and books.

My question is, when you get stuck, how do you maintain that same fire and motivation to keep pushing forward when it seems that all these cards are stacked against you?

Jack Smith · Answer

Hi Nathan,

Welcome to the business!  It's not easy at times on the investor roller coaster adventure.  You've hit some of the same limits most of us have at one point or another while investing in NE Ohio.  It's not easy finding bank lenders right now that will loan less than $100k or at least without astronomical fees and points.  Personally, we've just about switched entirely to private lenders that are good with a better rate of return than they are getting anywhere else.  There are some smaller local banks that will loan on those amounts but you may need to be local to get them.

I have been an investor in Canton and surrounding Stark and Summit Counties for nearly 30 years.  I'd be glad to help with any needs you have and maybe put you in touch with some local support.  I don't know long distant investing, but do know what works around here.  Pay attention to our local REIA - Stark County REIA to stay on top of local developments as were are an affiliate of the very active OREIA.  SCREIA doesn't do many virtual events anymore, but have a local volunteer group that is very strong and very involved in the local politics and activities.  We also have a facebook group that you can join in on for more timely and local interaction.

Let me know if there's anything I can help with!

Nathan Gesner · Answer

I don't think this is uncommon. I was going gang-busters through 2021. In 2022 I tried to purchase properties in several different states, but the prices were ridiculous, competition was fierce, and I had some pretty big irons in the fire here. I decided to take a break and focus on other things. I felt like I had lost my momentum, but really I had burned myself out and needed to take a break. I feel better now and am ready to hit the road running in 2023!

Maybe you just need to rest, enjoy life, assess goals, and prepare for the next step?

Henry Clark · Answer

Refocus

1.  Holistic-  use the lookup on my name and what happens if you die.  Get your entire wealth plan in order.

2.  You’re a RE agent in Washington.  Why are you investing in Ohio?  Use your strength.  Forget the easy answer it’s cheaper there.

3.  You need to develop a team.  Not vendors.  It’s Sunday 1000 am.   I can call any of my team and they will gladly take the call.   Bankers, excavators, electricians, security, surveyor, attorney, builder, etc.  No I don’t do it often.

4.  Document your path into the future.   Point A where you’re at.   Point Z where do you want to go.   Don’t get hung up on timeframes at first.  If you’re doing residential doors how many doors do you need to get to Z?  Cashflow or Equity position.  Timeframe?  This will force you to think strategically.  Example Finance.  How much financing do you need to get to Z? You don’t want to end up with lots of finance companies, because you can’t cross collateralize.  If a bank ask what their Federal Loan Cap limit is.   Is it high enough to meet your needs?  You want to chase 1/2% point with many lenders then they are vendors and not team members.  At XX units you need an office person and maintenance person.  Or a property manager.  Which means more doors.  Or as you have found out there is a ceiling to your current finance method.  You should have seen that coming.   Doing this path analysis will help you see things coming.

5.  Can’t find a deal.  Either change the way you’re looking for deals or change your deals.  A.  It snows in Ohio.  Duh.  Pick an area.  Have someone drive around 3 days after a snowstorm. Have them write down the address of every house that hasn’t cleared snow.  Later keep contacting them

B.  Look on the city or county GIS listing for everyone with past due taxes.   Lookup the post in here for GIS lists.  Guy was wanting to sell listings. C.  Same guy, same GIS process.   Look up everyone with xx multiple PID locations.  Contact these owners and offer them a solution.  If they are aging out as rental property owners.  An acquaintance died about 5 months ago.   His three kids don’t want to handle.  25 doors going up for sale.  Life happens.  You need to find them.

D.  Look at your existing properties.  ADU’s.   In the future buy only deals that are great or have value add.   Either ADU or property is large enough to subdivide and sell lots.

6.  Go with trends.  Google layoffs in your neighborhood.  Military housing.  Down market- look at Phoenix and Las Vegas

7.  Your neighborhood.  Why do the kids of auto dealers have great cars?  You should have the inside track in your neighborhood.

8.  I like Nasty.  Everyone is looking for that great SFH or MFH. Look for old elementary schools for sale, old motels, flat roof churches, daycare centers, etc.  Develop into MFH.

9.  Snowball.  Everything you have should be for sale.   Buy properties you can do Value Add and flip.  Home with 10 acres becomes home with 2 acres and 3 lots for sale.  Look for value add angles.  2/2 becomes 3/2.

Bruce Woodruff · Answer

Bottom line is that it's all about your/our attitude. We all go stale from time to time, it's just human nature.

Listen to motivational people on YT or wherever, that is always a great boost. I like Tony Robbins, he has a whole series on the financial end of life's journey. I even recently came across a couple good videos by Jocko Willink, very inspiring. Sure they're about the warrior mindset, but in a way, what we do requires that very mindset (IMHO).....

Adam Christopher Zaleski · Answer

My approach to real estate is very passive. I've been making small efforts and decisions over the past 15 years that have made a meaningful difference in my life. Try to create something sustainable. Make a decision today that will benefit you in 15-20 years. I see others chasing short-term returns and then burn out within 5 years, quit and never return. I would advise against doing that.

Chris Davidson · Answer

@Nathan Gesner a lot of great responses here, so will go a bit against the grain. Sometimes you have to pivot if the market isn't providing what you need. Maybe it is a different area, property class, etc... Or you can double down get after and realize you started your journey during the tail end of one of the biggest market run ups. That was not normal. Finally really assess what is changed. Is it deal flow, financing, winter blues, or something else.

Best of luck and get back to crushing it!

Eliott Elias · Answer

Fall back to your habits. Wake up early, make 100 cold calls, go to gym, write up 50 contracts, post 100 times on BP. You can do all these things no matter how you feel.

Nathan Harden · Answer

I appreciate the response, Nathan.

I totally understand taking a break but at the same time I did make a lofty goal of obtaining 15 new doors this year so even though it's tough right now, just got to keep pushing forward. I know there's a way to get these deals done, I think I am just going to have to start thinking more outside the box since I lack the ability to finance these properties and lack a ton of start up capital.

Nathan Harden · Answer

Thanks for the reply, Eliott.

When making cold calls, are you calling other investors or are you calling homeowners to see if they want to sell. Also, when giving offers, do you submit a written contract or do you just do verbal offers to see if it will stick before actually putting pen to paper?

Nathan Harden · Answer

I appreciate the response, Jack! I am glad to hear that you have ran into these same exact hurdles and have been able to successfully find a way to keep your portfolio growing! You said private lenders, are those lenders strictly people that you know or do they loan on other people as well? What do the rates look like with them?

When things get tough, how do you stay the course?

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