I bought a neighborhood strip center and brought no money to the closing

[Alex Fenske]

A little over 15 years ago, in the late spring of 2009, I was a brand spanking new real estate agent coming off of a miserably failed real estate investment venture. I was also a catering server, restaurant server, and bouncer (lol). I was broke enough that I couldn't afford rent at my apartment, but fortunately my landlord didn't notice, thanks in part or in whole due to some substance abuse issues.

Anyways, when visiting my mom in the neighborhood where I grew up, I had noticed this construction van at a house on our street. Driving around the neighborhood over time, I saw the same van at a few other houses. I wanted to see what these guys were up to, so I pulled up in front of a house where it was parked, on Arquilla Dr, got out and knocked on the door. The guy inside was named Alex; he wasn't the owner, but the contractor. He gave me the owner's number (Jeff) and I called him on the spot, hoping to be able to offer my services to help him find and sell more homes in the neighborhood. He had already been working with another agent for some time, but he was willing to give me a shot.

Over the next few months I earned the spot as his go-to agent, selling him one or two homes a month and helping him find tenants after the renovations were complete. We did that for about 3 years until Jeff informed me he'd fallen behind on property taxes, and all of his lenders called the loans due. He had no choice but to begin selling off the portfolio. I started listing the homes one by one as they became vacant, and we were doing okay with getting them sold - in 2012, that was no small task.

Jeff called me one day and asked me for CMAs on the next few properties that would be coming up. After I sent them to him, he asked if I would want to buy one of them. I literally laughed through the phone at his suggestion, because I was broke, in debt, and in every way and unqualified borrower, and the lending environment in 2012 was probably stricter than it had been since the invention of the 30yr mortgage. Nevertheless, Jeff told me he thought I had a shot with this bank, and that I should go down and meet with the president. So I did.

As it turns out, the bank had a problem too. Every bank at that time had way too many non-performing assets on its books. So on one hand, they couldn't afford to take on more NPAs. On the other, the prospect of short-selling the homes didnt look so awesome either. Their solution was for me to take over ownership of not one but five homes from Jeff's portfolio, all of which I had sold him and subsequently leased.

Despite my being patently unfinanceable, the bank president placed a bet on me because I knew the homes, I knew the tenants, I knew what I was doing, and I was rabidly hungry. They financed 100% of that transaction, and I took on a huge loan - a huge risk for a broke guy like me. Even one vacancy or non-paying tenant could potentially be a major problem.

And yes, there were vacancies, and non-paying tenants, and major problems. But I stuck with it. I racked up debt, at times putting expenses like property taxes on a line of credit. I learned how to do many repairs myself, I showed all the homes myself, and I made it work. I took no money from the cash flow (when there was any) and I never made a late payment to the bank.

This fall, nearly 12 years after the bank gave me that house, and over 15 years after I knocked on that door - after evictions, vacancies, insurance claims, and never taking a dime out of it - I sold that house and placed all of the proceeds in a 1031 exchange. Today, I used those proceeds to purchase a 5-unit commercial retail building without coming out of pocket at all. Four of the five units are occupied, and starting in month one, this property will cash flow substantially more than the house I sold to buy it. After I fill the last vacancy, the building will generate as much cash flow in one month as its predecessor would have generated in a year.

There are so many other stories whose origins are with that same knock on the door, but this one's already long enough. I hope it inspires someone who has been afraid to get started or questioned whether they should stick with it. I've found over and over that it's worth it. It isn't get rich quick, but it is get wealthy slow.

In the interest of candor, there are a few things you should know. First, the amount of learning I did since that moment 15 years ago cannot possibly be overstated. And there's so much more I don't know yet compared to what I do know. Second, this is definitely the highlight reel. I merely made mention of some of the challenges I faced, but those challenges cannot be overstated either. While they only took up a word or two of this story, they took up months and years of my life for which I earned nothing and lost much, at least in the short-term. Finally, and most importantly, no one succeeds alone. The list of people who helped me - took a risk on me, taught me what they knew, showed me an example of what not to do, gave me their time, believed in me, and even those who questioned me, broke contracts with me, owed me money - is innumerable, and I'm grateful to every one of them.

Today was an exciting day, and there will be more like it in the months ahead!