The Every Day Impact of $9.2 Billion Spent on Investment Property Renovations

8

For the past few years, I have been on a mission to shape a narrative for real estate investors that at best, is not understood by the main stream media and at worst is completely ignored.  I place a lot of the blame for the lack of coverage of this particular narrative on real estate investors and even investment companies like my families.  For too long we have failed to tell the proper story early on and have focused too much on our success as investors.  The story I am talking about features the one group that has felt the biggest impact from the estimated $9.2 Billion spent by real estate investors renovating their investment properties; the local, small business owners.

I noticed that many of the press releases I had put out over the past two years had focused on our numbers and the success we were having as a local real estate investing company.  These were important press releases and they were certainly valid, but they also allowed for the clouding of other more important stories.  Too often, the narrative around real estate investors and investing companies is one of opportunity and the success we are having because of that opportunity.  Many of my companies releases focused on the rapid growth of our company and featured numbers that large corporations might be releasing such as revenues, forecasts, growth and expansion.  They could have easily been interpreted by the media as releases about people making money in an economy where others are suffering.  They could have written stories about greed.  Very few in the media actually fault investors for participating in the market, but they also are in no rush to paint investors as a group that is helping the housing market.

Yet, when we pull the data, as a company we have spent nearly $9 million in the first nine months of 2012 with local small businesses from buying supplies to paying for labor. We have spent an additional $1 million with other small companies on the continuous upkeep required when you are managing 1400 properties worth over $130 Million!  In the recent real estate investor study that was sponsored by our company with BiggerPockets.com, self-identified real estate investors answered how many dollars they spend on an average job and the survey pointed to over $9 billion in total dollars spent by investors.  Some of those dollars go directly to small business owners and help them grow their businesses by purchasing new equipment and hiring new employees.

So why are we not telling the story about helping the economy?  How about the story of supporting small business owners and bettering a community?  Why are those stories not being told?  Because, as real estate business owners and entrepreneurs, we have been too busy talking about HOW good we are doing and not enough time talking about THE good we are doing.  Here are some of the stories that need to be told.

Small Business Are Great At Providing Exceptional Service

I’ll never forget meeting Danny Williams and hearing him tell me how close he had come to closing up shop.  He was a one-man show with one truck and struggling to keep ahead.  He was one of the hardest working people I had met and with the downturn in the economy, had considered going to work for his competition.  Danny owns Victory Electric and has been in the electrical industry for over 15 years.  When I met Danny, he still had one truck and was working by himself, but thrilled that he was still working.

Over the last 7 years, I have watched as Danny has grown his business from that one truck and working 12 hour days to hiring several employees and being able to have young men serve as apprentices under him to learn the trade.  Danny has multiple trucks today and has been able to give back in huge ways.  “I am able to not only earn a living, but I am able to help others in my community by offering them jobs and teaching them a skill.”  Danny views it as his obligation to provide for his family, his church and his community and has built his business on those values.  Our company is Danny’s biggest client and the hundreds of thousands of dollars we have spent on electrical upgrades on homes has enabled him to grow and give back.  One of the reasons we have been able to work with Danny and his staff for so long can be found in his motto:  “If you do great work, you clients will help you build your business.” I told Danny recently that his commitment to providing great service is why our commitment to him is so strong!

Hiring Takes Place When Small Businesses Feel Secure

One of the things we do as small business owners is spend some time each week driving through neighborhoods looking at our properties, looking at our current projects, checking behind our teams to ensure quality and every once in a while, running into a new vendor we want to try.  In the fall of 2007, my dad was driving through a neighborhood on a Sunday afternoon (the Cowboys must have had the weekend off!) and he drove past two men working on a yard.  He continued to drive though the neighborhood looking at a couple of our current properties and noticed about 30 minutes later that they were still working.  He pulled up and asked one of them to come over to the car.  That is how we first met Shawn Fowler and how Expert Lawncare was started.

Shawn had been an independent owner of a Matco Tools Distributor and his business was having trouble in the rough economy.  He started a lawn business on the side to provide extra income for his family.  My dad happened upon a job he was working at on that Sunday afternoon.  He commented on how Shawn was working on a Sunday and how good the job looked.  He was so impressed by the way the yard looked and the fact they were working late on a Sunday afternoon that he asked if Shawn would want some additional work.  Shawn jumped at the chance and has not looked back.

Lawncare is a huge line item for every renovation and is one of the few line items that can continue throughout the year. Shawn and his team quickly became one of our top vendors and have helped us to make the appearance of the properties we manage for investors a top priority.  Shawn understood early on that our commitment to excellence as a company started from the day we purchase the property and that he could grow his business by doing an exceptional job of cleaning and preparing the outside of the property before we begin inside renovations.  He does such a good job that many properties rent before the renovation job is complete simply from the detail of the property on the outside.

Shawn has grown and hired additional staff as well as purchased additional equipment.  He no longer owns the Matco Tools dealership and spends his time growing his lawn care business.  With the consistent flow of new properties, properties that are under management and experience a move-out and the constant need to keep properties for rent looking great, Shawn and his team have a reliable income stream.  It has enabled Shawn to grow his business in other areas and have confidence to continue growing.

Confidence Leads to Optimism Which Leads to Hiring

Tony Scott and his wife, Tara, are an incredibly successful couple who have built an awesome company.  As a retired police officer, Tony was very familiar with the needs of the city and had been trained in being responsive.  He used that knowledge to start a mobile locksmith company.  Tony was a one man show with Tara working behind the scenes on billing and scheduling.  As has happened so many times before, we were driving down Germantown Parkway returning to our office from lunch and were driving behind a locksmith van.  As it happened, we were in need of competition in the locksmith area and by competition I mean that we wanted someone who was reliable.  Tony had the right company and we met at the perfect time.

Looking back since we met Tony 6 years ago, he now has three vans on the street and has hired 6 new employees.  He often tells us that when we first met, he had no idea that we would become one of his biggest clients.  They recently shared with us that it was our commitment as a company to the Memphis investment real estate market that spurred them to have the confidence to add vehicles and employees.  Today, while our company makes up a large part of their business, they have the confidence to advertise for more work and to market their family run company as a leader in the mobile locksmith industry.

These are 3 very small stories of the very BIG impact that real estate investors have on communities.  While we are absolutely buying up properties in both blighted neighborhoods and owner-occupied communities, we are also providing jobs and stimulus to other small businesses and helping them grow.  It is through a combined effort that real estate investors have spent over $9 billion dollars in renovations and by all estimates, a significant portion has gone directly to those that need it most.  America’s small business owners.  If you are an investor or owner or employee of a real estate investment company, now is a real good time to start spreading the word about rebuilding your communities one job at a time.

Subscribe to our mailing list

* indicates required Email Address * First Name Last Name
Share.

About Author

In 2005, Chris Clothier (G+) began working with other investors and has since helped hundreds of investors purchase over 2,300 properties in Memphis, Dallas and Houston through the Memphis Invest family of companies.

8 Comments

  1. Great Article Chris: You hit the nail on the head. It appears to much time is spent talking about the purchases and no time talking about the changes we make. I believe reporters also should get on board with their questioning.( a wider spectrum of Q and A would uncover many great stories) Real Estate is with out question the engine that will drive the economic change and now more then ever the world needs and craves this inspiration.

    • Chris Clothier

      Larry –

      Thanks for taking time to read and leave a comment. I have been interviewed by some excellent reporters over the last 6-8 months with some big news outlets and I can tell you that they have no in-depth idea about real estate investing. What they learn about is what they can readily research on the internet and if all the info is self-promoting and never about the real life stories of making news, then they will never tell the story.

      all the best – Chris

  2. Another person that has benefited from investors are the actual end users – the home buyers. There are many who do not qualify for regular bank financing who now enjoy the dream of home ownership due to someone doing an owner carry loan on the property. We got into mobile homes and there are about 30 families that bought their homes and now own them free and clear while we were there. It gives you a really good feeling to sign the Title over with that last payment. They enjoy the home ownership and you feel good in having helped them attain the American Dream!

    Dale

    • Chris Clothier

      Dale –

      That is such an important point. We found out when we did our survey that there are other data releases but none of them take into account the amount of business done off the grid. There are a tremendous number of transactions and investors who do not use mortgage companies or realtors or the MLS to buy & sell property. They are not calculated at all in the numbers.

      Your point about benefiting others is well taken. The people that take advantage of others get all the media attention, but there are many, many others that actually do a lot to help other people whether they are future home owners or renters or small business service providers.

      Thanks for commenting.

      Chris

  3. Chris,

    Glad to hear you talking about this. Many see us as money grubbing carpet baggers. All in for a quick score at the expense of a community.

    On the contrary, even my small rental portfolio has pumped 10’s of thousands of dollars back into the local market. My target area has 1950’s homes. 5 years ago most were outdated and had no upgrades. Now, over half the houses have been remodeled by investors and have made great homes. Most home owners do not have the money or skill to do these level of repairs. If not for investors, the neighborhood would still be in its former dismal state. I talk to many folks who grew up there and tell them the improvements, the excitement is evident.

    Thanks again Chris. The old mantra of not talking about the business to family and friends is dead.

    Jason

  4. Great read and facts to back them up Chris. This isn’t ‘spin’ or ‘glass half full’ scenarios. We have always known that it us, the rehabbers, redevelopers, turnkey operators located throughout the Country that are taking a property that otherwise has fallen into disrepair which negatively effects the values and perception of values on the block and neighborhood, and take on all the risk to improve the situation where every party involved WINS!

    Think about it, this truly is a Win Win Win for;

    *The Investor – Taking on all the risk yet reaping the rewards and benefits of either ‘flipping’ or ‘buy and hold’ strategies that hopefully make sense (Sorry and respectfully Mr. President, we disagree with you…… WE DID BUILD THAT!!)

    *The Neighborhood and Community – benefits by holding and or increasing values as well as increasing optimism and pride that we are ‘digging’ ourselves out of this mess and will recover with the help of private risk takers like us!

    *Local Governments – Nice rehabbed rental or owner occupant property brings back local property taxes that were lost due since downturn

    *Employment and Local Business Patronage – As you mentioned, the ‘trickle down’ benefits to the immediate community as hopefully investors are hiring at least partially tradesman from the immediate area

    *Renters and New Home Owners – Are clearly the biggest winners with the opportunity to rent or purchase into a fine newly rehabbed property at affordable prices vs. the bubble years in many areas of the Country.

    We need to promote all of this in a positive way and get rid of the ‘all investors are greedy, slumlords’ who are only in for the ‘buck’!! We should stand tall and proud that it is we as a collective group that will transform and improve the real estate market and not a Government program nor the Banks.

Leave A Reply

css.php