"I'm selling the flower shop" said my retired father.
"Are you sure?" I said with some hesitation.
A retail storefront with 3 apartments in Chicago.
Owned free and clear, grossing 5k a month.
Why sell?
He received a full-price, market-value offer.
Plus, it would soon need some expensive repairs.
He was also planning to move to Florida (from Chicago).
Who was going to manage it once he left?
He wanted to take the funds and do another Airbnb.
We set up 2 together in 2021 and they were doing great.
I said, "ok, let's do it."
I warned him that it might be tough to match that kind of cash flow relative to his risk, but we were riding high off our current STR wins.
But 2022 was NOT 2021.
The market in S. Florida was on FIRE.
Prices, interest rates, labor costs, property taxes...
All SKY-HIGH.
There was no inventory.
It was wild.
It took a Herculean effort to get an offer accepted.
We ended up doing a 1031 exchange into a nice single-family property with a pool and hot tub.
But we overpaid for the property AND it still needed repairs.
Not to mention...
It's not currently grossing anywhere near the amount of money we'd like due to lower occupancy and high expenses.
We are supplementing the occasional loss with gains from our other profitable Airbnbs.
Not ideal!
And when we do make a "profit"...
It's laughably small for the amount of energy and work we put in.
Talk about taking a hit.
This property has been the bane of my existence all year.
Now, on a long enough time horizon...
We do have a nice house in a very up-and-coming area.
But we need to make money today, not tomorrow.
The worst part?
My dad is in his retirement years.
And as you can imagine...
Carrying debt and having less cash flow with more risk was not part of his plan.
Not when he needs the money the most.
He doesn't blame me, but I know it's stressing him out.
I feel terrible.
I tried my best with the resources, knowledge, and experience I have.
But it wasn't good enough.
I grind my teeth now when I sleep, and my nights are restless.
Random dreams and worst-case scenarios rush through my head.
Writing this is cathartic for me.
Since writing is thinking...
This really helps me work through the scenario.
Posting it here makes me take it seriously.
A lot of lessons here (with more to follow, I'm sure)
• The market is unpredictable and has no feelings or emotions. It's going to do what it's going to do.
• Greed for "more" underpinned a lot of the decision-making when we should have been a lot more conservative.
• We should have just held onto the property and borrowed against it (tax free) if we saw an investment opportunity.
• History doesn't predict the future. All you can do is make the best decisions today and learn from every failure so that you become a better investor over time.
• You can't expect to play the game and not miss a few shots. I'm not a bench player, and I'm definitely not in the crowd.
Man, I'm buzzing with emotions right now and just had to let it out. Big thanks if you stuck around and made it this far.
I have some plans for the property following peak season in Florida (since the slow season will kill us) but time will tell how that goes.
I trust and remain optimistic as I continue to search for the silver lining.
