8 More Units... The NEW Way

Today we added 8 more units to our rental portfolio. This 8 unit is not like the other properties I have purchased in the past for several reasons:

#1. This is the FIRST multi unit I have ever purchased and utilized property management right from the start. In fact, I am probably driving my property manager crazy because I don’t know what exactly to do. This will be the first property I own that the tenants will not know me, I will not deal with them, they will have no need to communicate with me. As I type that– I have a huge smile on my face. And for a girl with natural resting bitch face, a huge smile is a big deal.

You see, part of my 2017 goals were to let go control of parts of my business. I’m a busy girl, and I can’t do it all anymore. So I made the decision to put property management into place after finding out someone I know and wholeheartedly trust in my area was becoming a property manager. (Shout out to the best- Sherlie Serrano of Lehman Property Management Group). Its not just about letting go of control. Its about refusing to do anything that I don’t enjoy anymore. I don’t enjoy being a landlord. I ENJOY Passive Income. I enjoy hunting for off market properties. Unfortunately, when I first started learning about real estate investing, no one told me to factor property management costs into my numbers. They just taught me how to be a landlord. Unbeknownst to me, this was just another job. I didn’t bust my ass to retire from a 13 year long career in healthcare just to take up another stressful job! I wish I would have known better from the start. But hindsight is always 20/20. And all I could do was work and re-adjust things to put property management into place. This meant a drop in my passive cash flow. This in turn, meant doing more flips to off-set my drop in cash flow and provide more of a reserve to be able to afford property management. In time, as I continue to accumulate properties and pay down the ones I have this will even out again. I have no worries, and I don’t regret the time I self managed. I have the utmost respect for what property managers do. And realize now more than ever, that the cost is well worth it to have the right manager in place.

#2. I looked at this property on the market (everyone that knows me will GASP right now). I NEVER look at properties on the market. However, I had looked at this property a few years ago, noticed it came on the market and went and looked at it with the listing broker. The owners had done some improvements over the past few years since I last took a look and I wanted to make an offer. I told the broker what I wanted to offer and he told me the owners would not go for it. We never submitted a formal offer. The broker told me there was a lot of interest and lots of showings (they sometimes just say this to push you into making a higher priced offer. I’ve been around long enough to become numb to anything they say. The numbers on the building tell the story and that’s all I need). Flash forward a few months and I was STALKING this property (something I teach my students to do if they really want something). I would email follow up with the broker, I would watch it on the MLS for price drops. I stalked it. Eventually, it EXPIRED from the market. So….. being the stalker that I am, I looked up the owners information and sent them notecard in the mail telling them that I looked at their property twice in the past few years and I want to buy it. And don’t ya know it….. they called me. While all this stalking was going on, I was also shopping my current bank to see if I could get better rates and terms to make a better offer. (CONSTANTLY be shopping your lender). I found a lender with WAY better rates and terms. I actually went back to my usual lender and asked them if they would match it. And they said no and gave me some line about priding themselves on customer service. Customer Service is great and all, don’t get me wrong. But rates and terms outshine everything. With the better rates and terms from a new lender, I was able to lock up the deal with a more solid offer.

#3. I used my money! I NEVER EVER EVER have NEVER EVER (you get the point) used ANY of my own money to buy any of my properties. I have always used private money. But my business is growing and shifting. We had some money in the bank (which is the WORST place for it to be) and had been doing some private lending and decided we would take some of it and put money down on a building and finance. This is, officially, the first building I have ever purchased that wasn’t a cash deal. It was an odd process for me. Banks are slow, the process is slow, and wow…. SO much paperwork at closing compared to a cash deal. I haven’t had to go through that since I bought my own personal home 9 years ago!!

I have learned as you grow your business, it will change so much. The way you run it changes, the way you finance it changes, the way you begin to handle everything changes. And change is good. You cannot grow if you do not change. I don’t really celebrate every building we buy or flip we do anymore. In fact, with this building we are a long way from celebrating. It needs a lot of work, and a lot of change itself. It is a doozy of a project. BUT… I do celebrate growth, personally & professionally, that comes from change.