All Forum Posts by: Tyson Scheutze

We left our story of the beginnings of my investing career with me checking into an extended-stay motel in Syracuse, NY.

My message to Powers Contracting was simple: I am here until we are done with the renovation. Remarkably, the pace picked up on the job site, and what hadn’t been done in months began to be completed in a number of days.

Every day, I would try to beat the contractors to the jobsite and walk around to assess what was done the night before and what would be prioritized that day. I still had no clue what I was doing, but I started to learn the impact of presence.

Eventually Powers Contracting and I were able to get the two units renovated and rent ready. I still had zero dollars a month cash flow, but I felt good about the progress we had made. Not knowing the best place to market our property, we ran the ad below in The Post-Standard, the Syracuse newspaper:

NorthSide: HUGE, CLEAN 3 BR apt, new renov and bath, 500+ utils, avail immed, sec 8 or PA ok. call 256-9357

I don’t remember being overwhelmed with interest but Joe proved to be a better leasing agent than a project manager. I wish I could say our rental criteria was stringent. Unfortunately, I think we followed the fast food strategy of first come, first served.

Soon our renter/squatter also vacated–accepting our $100 cash-for-keys offering. There was not even the remote possibility of income, but I felt the benefit of having positive control of the asset for the first time since acquiring it. Even though the squatter left the unit broom clean, once we assessed the last unit, the reno budget continued to climb. When the dust settled, we spent over $12,000 total but had a renovated-ish triplex.

We rented out the units and had $1500 a month gross cash flow on an asset we had a $45k cost basis in. It was at this point, I made one of the best decisions of my investment career; I decided to leave the frozen tundra of Syracuse in order to relocate to the greener pastures Augusta, GA.

Being that I was about to move even further away from my investment, I made the second best decision of my nascent investment career: to sell the stabilized asset, 1513 N State Street. We priced the triplex at $60k and there was a decent amount of interest for a $60k asset grossing over $1500/month. Eventually we went under contract, with Joe this time playing the part of agent. We sold the property and when we paid everything off, we made just under $10k.

I felt I was officially an investor.

What I failed to reconcile in the ledger of this transaction, and hundreds after it, was my time in the investment. It would take over a decade for me to recognize the value of my time and that was the first time I was truly an investor. 

Investor Origins Story: Part 2

We left off with our aspiring investor (me) having purchased 1513 N. State Street in Syracuse, NY. Memory had a purchase price of 50k, however, I actually purchased the triplex for $38k with an $8 thousand seller credit. So, there I was with a 30k triplex, no experience, and little money. Surely, this was going to end well.

After purchasing the triplex in June of 2005, I created a budget to repair 2 of the 3 units. The third unit had a non-paying squatter who in the fall would be offered cash for keys in order to vacate. The total budget for all 3 units was inconceivably going to be less than $8k.

It didn’t take long for the contractor, Powers Contracting, to realize this budget was not possible for two of the units–let alone all 3. Several months and several change orders later, I gradually came to the same realization.

November 2005, saw the cash-for-keys offering to the squatter which gave me a 100% vacant triplex with winter-month heating bills. My investing career was off to an inauspicious beginning and it was only going to get worse.

Nearly six months in and with over 50% paid to the contractor, I received reports that the job was definitely not 50% complete. I had connected with a do-it-all guy named Joe, who was the agent who brokered my purchase of the property. Also, by default of a poor design, he became the project manager and property manager. Joe was a really nice guy, very honest, and he tried very hard.

Joe was not a specialist in any of the tasks or functions he was performing. And this was to be my first experience in the value of specialization or cost in the lack of.

With ballooning renovation costs, a shifting scope of work, and a renovation completion timeline that was flexible at best, it was agreed that I should come to Syracuse to see the investment for myself. I rented a car, drove to Syracuse and decided to put eyes on the progress. Joe was not wrong. We definitely were nowhere near 50% complete.

With no clue what to do, I left the jobsite despondent at the state of my investment career. After determining there was no other option, I realized I was going to have to take control of the jobsite.

The next day I gathered the crew and told them I was not leaving Syracuse until the job was done. I settled into the extended-stay motel and the bleak and dark Syracuse winter days and nights.

This was not the umbrella-drink vision I was sold for investing in residential real estate. But this experience would be a reality of the challenges that can come with investing and the first of many experiences which would shape Auben’s philosophy of specialization and a team-approach to oversight and accountability.

Investor Origins Story: Part 1

When I began my career in real estate in 2005, I didn’t have a lot of money or a lot of knowledge. What I did have was time.

I used all of this time to intensely learn about real estate. Initially working as an apartment leasing agent for Barbara Cocoran-owned Citi-Habitats in the East Village of New York, I learned that Craigslist was where you listed every rental and doormen really knew everything about NYC real estate.

I enjoyed the experience of working as an agent, however I knew I wanted to be an investor. There was still the small issue of no knowledge and no money.

Not deterred, I spent a lot of time reading books like Rich Dad Poor Dad, Gary Keller’s Millionaire Real Estate Investor, and scratching through deal projections for properties I couldn’t afford to buy. Besides analyzing hundreds of deals on paper, most important to my initial education was networking with investors by attending Real Estate Investor Association meetings.

Navigating the real estate info-education world of charlatans and snake-oil salesmen, my goal was to find the folks who were actually teaching and learning by doing.

My search eventually introduced me to working class New Yorkers like Eli and Marina, who, seeking a better life through passive income, created the Syracuse Connection which focused on buying property in the frozen tundra of upstate New York.

Some believed Syracuse had a promising future as a city looking to reinvent itself. There was talk of the city becoming a tech hub, proposals for portions of the city to be enclosed in a bubble to make the winters more hospitable and a huge mall/hotel development project called (ironically) Destiny.

Syracuse had a lot of things which failed to materialize, however what it undeniably had was cheap real estate. After nearly a year of looking at deals, I found a triplex on 1513 North State Street that I purchased for 50k and thought there was no way it could go wrong.

Everything went wrong, and this began my first day as an investor.

Nearly 20 years later in my investment career, I still expect for things to go wrong in my investments. However, I now have a deep and knowledgeable team at Auben Realty to increase likelihood for things to go right.