Rethinking retirement?

Real estate?  In this recession?  This blog is about selling in a hurry, buying a house on sale, watching property values, improving your home’s appearance. . . and, it is about thinking about, planning for, investing for, and worrying about retirement.

The best-laid plans of a hardworking mom.  I saved money, have an IRA. Invested conservatively as I got older.  I followed financial advice of experts.

So much of it is gone now, I can hardly remember those days of calculating and smiling.  I was on track to retire, even early.  Not any more, though – like you, and your friends and my friends and their friends. I grumble, but I can’t complain. I still have a job, though that’s not for sure in the future. I have plenty of years I can work ahead of me.  And I’m certainly not broke. 

Welcome to my blog.  I’ll be musing about retirement, this recession, and investing in real estate. Comment freely, ask questions, bookmark, or wander off.  Glad to have you if you stay and read!

Outside the Comfort Zone

Well, I’ve been learning what it takes to be a wholesaler, something I need more of in order to succeed: guts! If I make an offer, will it be low enough to leave any profit for me when I sell it to a buy-rehab-flip investor? More importantly, will an investor buy it? Will I back out of the closing and make everyone mad? Or will I go ahead and buy it with no buyer in sight, whether that’s a good idea or a terrible one.

The fact that there’s so much less money (in my stock funds) than there used to be is, I think, making me more cautious and timid about investing. The amount of money I have to put into real estate investments is quite finite, and it’s scary.

I’ve been holding off on buying a large multifamily, too, because prices are still dropping here. An even bigger bargain is always tempting.

Chutzpah, balanced with good judgment. I need more chutzpah, I think!

Is it Working?

Wow! Linked up with a partner from Texas while I was at the David Lindahl seminar on Syndication with Private Investors. Now we are discussing a specific apartment building, in a terrific location in an emerging market. Is this cool or what? How lucky I was to hook up with someone who lives in the area, the American emerging market, so he can check out properties and knows the neighborhoods.

I not only discovered a well-located partner, but we discovered some similar values – what we wanted to do if we succeeded in achieving financial freedom through investing in real estate. What kind of luck is this?

Networking

It seems there are a lot of demands in this business! Tonight was networking at the Chamber of Commerce. I’m not sure I got my cards out to everybody – well, certainly not to everybody – but a few people seemed mildly interested in emerging markets. Not so interested I gave out my CDs.

I can only do so much mingling in a room full of people talking loudly. I spent some time with people who opened conversations with me, but didn’t get talking about real estate to everyone. They say that’s bad form, anyway, that it’s important to listen. I spoke to a graphic designer, the head of a private school, someone who worked with commercial waste removal, and a bunch of folks from an internet company. I guess it wasn’t too bad! Networking seems easier at the Real Estate Investors Association; everyone knows we can all use connections with each other, usually in clear and direct ways. Tomorrow night, conquering networking at the REIA! There’s been plenty of practice for all of us, at the speed-dating, I mean, speed-networking. But this will be my first time to network with an agenda. It’s cool – it’s an opportunity for them, as much as for me. How to conquer shyness in the networking gig!

More Fun with Emerging Markets

This time I’ve been learning about emerging markets and syndication from a seminar by David Lindahl. Incredibly exciting. I learned about new emerging markets in the Southwest, and even met a partner who is (1) an experienced real estate investor and (2) lives in that area! It can sound too good to be true but we met dozens who are doing exactly that.

Instead of staying in the conference hotel, I stayed at the beach “cottage” of some relatives, one of those terrific Victorian shingled rambling houses, set on a grassy area with similar cottages, but not too close. The dunes are undisturbed here, rather than built upon. The whole area is owned by an association of the cottage owners, and it is due to them that the dunes and the grassy area beyond the dunes is preserved, rather than paved and built up with houses cheek-by-jowl. Is there some irony in admiring the under-developed, beautifully-preserved natural beauty, while attending a conference to learn to make money in real estate? There is some, and it’s mine to struggle with. For the moment, I content myself with knowing I’m not involved in building anything new, covering up any new land with asphalt and concrete. But there are more of these conflicts involved, many more.

Condo conversion. Who would have recognized controversy here? But it involves eating up the rental market, when the housing market gets too hot, too overpriced, is a great time to convert apartments to condos. But where to the tenants live?

But back to the seminar. Despite its surreal nature, people with minor resources learning real estate techniques used by the big league players, it seems possible. With a partner, even probable. And certainly my IRA calls out for such investments! Scary, but worth trying.

Emerging Markets

I’m working on an educational program that suggests you find emerging markets elsewhere (assuming that your local market is in the slump that’s generally considered to be nationwide, if not global). This involves a lot of research, like finding demographic information from the local Chamber of Commerce, planning commission, Board of Realtors, and numerous other sources. We need to find out whether there is job growth or shrinkage, people moving in or moving out, moving into what neighborhoods, city improvement projects, and on and on. This is not a new idea. Marc Stephan Garrison and Paula Tripp-Garrison write, “Ever since 1986, [we] have [identified] real estate target markets.”

I had been working on an area that’s not too far away – the Bridgeport-Stamford area of Connecticut. After days of scratching my way through reports about new initiatives, population projections, and projects developed to attract new businesses, I realized that most of the webpages I was using hadn’t been updated since 2007. It appears (to me, and please remember I am an utter novice at this task) that Bridgeport was an emerging market, but that the general recession seems to have dampened it considerably.

On a list of cities that were good places to start a new business, I found Seattle, Charlotte, Raleigh, Orlando, and others. The idea of looking for a place so far away (I’m in Massachusetts) in which to hunt for large commercial (multifamily) real estate is absolutely daunting. And haven’t Charlotte and Raleigh been considered the favorite spots for real estate investors and developers for months or years now? I suppose my uneasy intuition ought to take a back seat to green-space development, incentives for job creation, and the lot, but this isn’t going to be an easy leap to take.

“You miss 100% . . . “

“You miss 100% of the shots you don’t take.”  A quote from Wayne Gretzky, hockey hero. The Great One.

I’ve decided to take the advice of many real estate investors:  start taking shots, no matter how ridiculous.  I’ve heard many times, “If you’re not embarrassed by the offer, you’re offering too much.”  In my town, it’s hard to tell there’s a huge drop in housing prices nationwide.  Real estate here holds its price really well.  The embarrassing offer I made today was in this town, and it was turned down promptly.  But who knows?  The asking price would be a high price in many communities near here, and sales are slow, so anything’s possible.

I saw a house the day before yesterday that the realtor had called “a gem” in the listing.  Well .  .  .  it had been an old and raggedy 4-family, much of it sitting empty.  The present owner had filled it up and assigned one of the tenants the work of fixing everything up.  The tenant was doing a fair job; the apartments looked habitable.  The common space had not been touched.  It was ragged, filthy, rusty, had oil spills, cold air whistling through cracks and holes.  A “gem?”

In its favor, she said that the neighborhood was on its way up.  She pointed out several neighboring single-family houses that had been rehabbed quite nicely.  One even had these little skinny shutters beside its windows – windows placed in such a way that if you put regular shutters on them, they’d overlap generously between the two windows.  Those have to be custom shutters, and that had to cost some money!

The most interesting part of this 4-family’s story, though, was about its owners.  They owned a  number of properties, and lived out of state.  This 4-family was listed for sale for less money than is actually owed on it.  They are planning and hoping for a short sale.  They hadn’t made payments on it for 5 months, she said.  Weren’t the tenants paying rent?  “Oh yes, all of these tenants are paying rent.”  (Probably not the guy fixing everything up.)  One of their properties was in yet another state.  It had burned to the ground. This realtor had listed several of their properties herself.  One, in [some other place] burned to the ground.  The other one sold for . . .

My agent and I exchanged glances and tried not to laugh.  Wow, what a coincidence these unfortunate landlords have experienced!  Upside down in their properties and can’t get them sold?  Took out a second mortgage to pull out some cash?  And then two burned?  What a shame!

Amazing.  I suppose coincidence is one possibility.

While it is still standing, I might make another low offer on it.  My agent thinks it’s a possibility, given that it’s going to be a short sale anyway.  And it needs work.  It may never be a gem, but it needs work now to bring it up to tolerable standards.

I had to share this joyful song!

It has nothing to do with recession, real estate, or retirement. Just politics, history, and joy!

To market, to market . . .

Join the local Real Estate Investors Association. Check. Join the Chamber of Commerce. Check. Talk about what you do. Check. Volunteer for committees, be visible at your association, club, church, and chamber meetings. When? Have you got that kind of time? I would have to be out every evening. Well, almost.

Networking. It’s incredibly effective. I have a huge pile of business cards gleaned from networking meetings at the REIA. I’ve had offers of partnership, suggestions for financing, ideas for hunting down deals, and just plain nice new acquaintances. I’ve already called some of these people with questions, ideas, or proposals.

This is the free marketing, or at least, not very expensive. My local REIA cost under $100 a year’s membership. So did the Chamber. . . until I got the second bill, and realized that $80 was per quarter! I guess I had known that; I probably forgot. I was about to join the Better Business Bureau (not so much for networking as for credibility), but since it cost about what the Chamber did, I have to wait. Funny about the Better Business Bureau; it carries a lot of weight with most consumers but doesn’t really have the kind of stringent entrance requirements one might think. There is a code of conduct you have to sign.

Business cards. Essential for networking. I need to order more soon. They are so cheap online it will astonish you!

I suppose I could be printing up “We Buy Houses” bandit signs and car decals and flyers and newspaper ads. Those bandit signs are sprouting like daffodils in certain neighborhoods and on some corners. It’s not for me, though. You have to go out and set them in the dark of early morning, and try to snatch them back before the authorities take them away. Many investors hire someone to do that – making someone else do the bandit work! Then you’re supposed to have a toll-free number on the sign, with an answering service who are trained not to give your identity to the police. (In case it wasn’t clear, these bandit signs are against city/town/county ordinances almost everyplace.)

Marketing is considered essential in real estate, as in any endeavor that involves selling something. Web 2.0 marketing, such as growing your presence and networking on Facebook, LinkedIn, and the like, has its ups and downs. This poor blogger has had his Facebook identity “borrowed” by someone attempting to swindle others out of money!

In general, though, I think that networking, whether in person or virtually, is a powerful force in marketing. And I discovered I like it! Virtual networking can take up hours; for me, talking with people at various events seems much easier.

I don’t know much about marketing. But I have an idea! I’m going to study the methods of those real estate “gurus” whose marketing materials are so effective on me! More on this later.

All That Jazz

There’s so much hype in the community of real estate investment education. You find it in the books about investing: you don’t even have to look inside, it’s right on the cover! We all know that the web gives us ample examples of hype in the courses, ebooks, seminars, and “boot camps” that you can spend any money you might have been saving for a down payment. “No problem! No money down! Hard money lenders! Private investors!”

I thought perhaps that real estate investor associations would be rational, no-nonsense places where the everyday realities of real estate investment would be discussed. Not really. Some of these same gurus make the rounds of the REIAs, financial multi-level marketing schemes are touted, and the hype goes on.

I yearn to believe in these programs, these teachers, these methods. I want to believe that there is “no competition” in probate property. And that this “unique approach” will distinguish me from the dozens or hundreds of would-be investors sending postcards to homeowners in pre-foreclosure. That buying this course with 400-page manual, 8 CDs, and 6 DVDs will teach me the way to reach bank-owned homes before they are listed on the MLS.

The promises of wealth and ease are astonishing, but very well-crafted. Well, many of them are well-crafted. I am not personally left drooling at the photos of mansions, boats, and expensive cars that are temptingly inserted in the ads for these educational programs. But I am drawn in when they offer enough information to sound credible, even when they minimize the work and greatly exaggerate the rewards.

While I don’t have enough sense to resist some of these temptations, I do know enough to save the boxes and the bubble wrap, and some of these courses have gone back to their publishers.

HelloooO0Oooo

Sometimes bloggers wonder if anyone is reading. (Probably not in such a new blog!) One can spend hours trying to make the blog more visible (time not spent blogging, I note), listing it in blog directories, chatting on others’ blogs and leaving your url, and generally being “out” in the world tossing your url about.

I listed with 4 or 5 blog directories (there are links to all of them on the About page), and one especially interesting “blogroll,” condron. Lots of blogs, many of them really interesting. And a lively discussion forum with other bloggers who would like readers and feedback.