My Million Dollar Day

October 29, 2008 was a good day in my real estate business.

A pretty good day in fact.

Because on that day I bought a little over $1 million in real estate. One 20 unit apartment building and one single family home. (And didn’t use one penny of my own money. But that’s a topic for another post.) Not only that, but I had an offer accepted for what will be my 11th single family rental home, and a colleague that I’m helping to buy his first rental had HIS offer accepted as well.

But like most things all of this didn’t just happen. If you’ve been following my travails you know that I’ve been slogging through the process for months (since April 5th of last year to be exact) on the apartment building, and at various times thought that it just wasn’t going to happen.

Now I’m not going to give myself tennis elbow patting myself on the back about this because it’s not my style, but I was fortunate that two of my strengths match up well with my two fundamental take-aways from this experience. And they are:

  • Patience is key. The process required to buy an apartment building takes time. A lot of time. No matter what. On my single family homes my all-time record is 11 days between offer acceptance and closing. That’s not going to happen with an apartment buildings. Personally I scoffed at it when everyone told me that it would take six months to close. I’m not scoffing any more. There is no way to short-cut the process, and I don’t think that you’d want to when you’re spending a million dollars. This is a marathon not a sprint so plan accordingly.
  • Persistence is critical. My first deal died through no fault of my own, and this deal died three times since April. But the location is spectacular, the numbers are spectacular and there was/is substantial upside so I was not going to be denied as long as the fundamentals remained the same. Out of all the skills or traits necessary to bring this to closing Iā€™d say that without a doubt that dogged, focused persistence is the most important.

I can’t tell you how excited I am to get started harvesting the upside potential on this building. (The best part about it was that my kids invested in this building as well. They cashed in their savings bonds and all four are now earning 10% interest on their money.)

But lost in this discussion and dwarfed by the building in terms of dollars is the little single family home that I closed on in the afternoon. Now you wouldn’t BELIEVE the grief that I continue to get for my dogged pursuit of single family rental homes, especially since I’ve made the leap to apartment buildings.

But not only do the numbers make sense, they’re off the charts. It’s a three bedroom one and a half bath bungalow in the best school district in the state, Grosse Pointe. It’s all brick, has a full partially finished basement, central air, a two car garage, refinished hardwood floors, nice paint (actual colors) and all appliances. The roof and mechanicals are in great shape as well. It’s in better than move-in condiiton.

I bought it for $60,000 and had it rented for $1075 per month before I closed on it. A house across the street sold for $137,000 in 2005. So cash flow and upside. And oh yeah by the way – my private investor funded this 100%. And it STILL cash flows around $300 net per month. And it will cash flow on Day 1.

So my question back to my grief-giving friends and colleagues is – why not?

So yes I’d say that we had a good day in my real estate business. A million dollar day. A BSD day. šŸ™‚

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