Are you a “Turkey Investor”?

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These last two months have been eye opening for me as a real estate investor.  On a not-so-serious note, I have learned some new terminology like “turkey person” and “turkey investor”.  On a serious note, I have gotten a first hand and up-close education on why I failed the first time around as an investor and how I never plan to fail again.

Learning To Maximizing My R.O.C.?

To help you get a clear picture of where this article is going and how I came about to write it, I want to tell you where I have been the last two months.  I have been to meet with multiple different community leaders, community action groups, neighborhood stabilization groups, job building organizations and to top it off I was able to participate in a Boys’ & Girls’ Club of Memphis “Youth of the Year’” competition.  I have been on a bit of a soul searching mission lately to really understand how I can get deeper involved in the growth of Memphis.  To be fair, I love this city.  But, I have felt a calling to get out of the shadows and take an active role in some pretty serious issues.

If you don’t know who Tony Hsieh is, I suggest you open another browser and Google his name.  You are going to find an overflow of stories about his latest venture in Las Vegas.  I urge you to not only read them, but read through the stories to get a sense of what Tony is really doing in Downtown Las Vegas.  I have known about Tony Hsieh for a couple of years and have felt my business world being slowly pulled closer to his.  I recently read a New York Times article on Tony and his group and it inspired me even more.

He may very well be showing all of us how to take urban and even neighborhood decay and rebuilding it from the inside out.  Ands I want you to take special notice that he is not doing it by throwing money at different groups or organizations and saying good luck.  Yes, he is committing his own money to the project.  But he is also committing his whole heart, soul and energy to the project and bringing a whole bunch of people who share his vision along for the ride.

He has an interesting approach to attracting business owners that decide to join up and help with the revitalization of downtown Las Vegas.  He tells them that every factory in the world is doing everything to maximize R.O.I. – return on investment.  He tells that he his project is doing everything to maximize R.O.C. - Return On Community!

This one line jumped out at me in the New York Times story and it really began to weave together for me what I had been experiencing.  As an investor, I was looking for a way to not just earn a return on my money by buying property.  I knew I would be satisfied going forward unless I was giving a return to the community as well.

How A 17-Year Old Kid Inspired Me

As a judge in the local Boys’ & Girls’ Club “Youth of the Year” competition, I had a chance to sit down and interview 5 different area teenagers who had won individual club nominations and then been selected as finalists.  The award gave them a chance to earn  a small financial prize and then go to the statewide competition.  I had no idea what I was about to experience and the phrase that was going to stick with me for the rest of my life.

The kids themselves were amazing in he way they carried themselves and presented their stories.  From one of the first deaf competitors in the history of the competition to kids’ from single-parent homes, these kids wanted to send a clear message that their personal struggles did not define them.  They wanted something better not only for themselves but for their friends, siblings and others in their communities.  They had no idea what each of us did as judges.

One by one I heard their stories of growing up in blighted neighborhoods, although not all of them had the same struggles.  Some of them dealt with the lack of transportation where they lived, others watched as homeowners moved into their neighborhoods but could not afford the home they bought and soon lost it to foreclosure.  One contestant in particular though really stood out to me as he talked about not only his neighborhood, but also the area of town that he lived.  He explained that he was lucky.  He lived close enough tot he Boys’ & Girls’ Club that he could go and spend his time after school at he club.  However, if the club were not there, he told us that he would have no where to go.  He described an area with no grocery stores near by.  No strip centers with a sandwich shop or an arcade or a convenience store to visit.  He described an area with no parks, no community centers, no community pool…nothing.  In his words, he described an area where the only place the kids had to go was the street corner and under the lamp post.  As he put it, nothing good happens on a street corner or under the lamp post.

Where he was describing is a very popular area of town for real estate investors.  For the parents, the problems he was describing were less severe because they had cars and the neighborhoods are near local jobs.  The things he was describing as missing had  all moved to high traffic intersections and neighborhoods had become more isolated.  When I asked him what he would like to see done he answered point blank that he would like to see someone invest in the area itself and not just buy up all the rental houses.  There it was.  A 17-year old kid just described R.O.C. better than anyone else could have.  It is not simply about the return you put in your pocket.  If you want to be truly successful, you have to have a return you put in your hear.  It is about the people.

Are You A “Turkey Investor”

When the judging interviews were over we had the honor of joining the kids for a lunch.  Again, my head was spinning a little bit because I had been searching for ways to get involved deeper in the community and I had just had a kid way to young to act and speak as old as you was, describe for me what he wanted as a resident of that community.  I didn’t feel shame at all for the way I had invested through the years.  I just immediately realized I would have had an easier road had I taken the time to invest in the people themselves.  Little did I know there was one more surprise coming.

On the way to the lunch that day I was driving down the highway towards downtown Memphis and glanced over to a neighborhood that had really been cut off by the rest of the city by the highway and the development of the city outward.  I distinctly remember driving through that area several years ago and thinking to myself that someone should really do something about this area.  It was rough and in need of some love.  I remember thinking I would like to do something, but I was scared beyond my wits to get out of the car.  That day, driving to the competition, I glanced over and thought to myself again “someone should do something about that neighborhood”.

At lunch, they brought in a guest speaker.  He was a man whose story I had heard before, but I was really not familiar with all the details.  His name was Bill Courtney and he as featured in the 2012 Oscar winning documentary “Undefeated”.  He stood to give a speech that lasted maybe 20 minutes and I don’t remember taking a breath after about 5 minutes in.  He was a volunteer high school football coach in an area of town that very few would volunteer for anything.  He described a neighborhood just off the highway that he and thousands of others drive past everyday on the highway.  He described his own feelings about that neighborhood and asked how often any of us glanced over at that neighborhood thinking that someone should do something about that.

“What the Hell is wrong with you” he asked as he stared at me in a room full of 50 people.  He didn’t mean to be starting at me.  It just happened that as he was addressing the crowd and I was in his line of sight at that very moment.  But it shook me up pretty good.  I had to ask myself the same question.  What the Hell is wrong with me?  Why not me?

He went on to describe the exact reason why I had never taken action before.  He told a story of one of his players helping him to get through to some other players on the team who were still struggling away from the football team.  He wanted to know why he had not been able to earn their trust yet.  One player clued him in on the problem.  He told the coach that the other players were just sizing him up and waiting to see if he was a “Turkey Person” or not.  After asking what that meant, he got his answer.  The “turkey person” is that person from the suburbs who shows up every Thanksgiving and Christmas with turkey, ham, canned goods and presents.

I was the guy who thought that giving a gift certificate when a renter closed a house, or giving a tenant a ham at Christmas was something special.  I thought I was making a difference and giving back.  Was I giving what I had, yes.  Was I giving what was needed, probably not.  I recognized in his recounting of what his player had told him, that not only was I a “turkey person”, I was a “turnkey investor”.

He told how the player said they were thankful and of course, they took the gifts, but they knew they would never see those people in this part of town on any of the other 363 days out of the year.  They knew this was the opportunity for the “turkey person” to pat themselves on the back for a good deed done and then go back home to the suburbs.  The other players were just waiting to see if the coach was really committed or not.

Are You Committed To Where You Buy Real Estate

I have to admit, I have never been fully committed to the neighborhoods where I have invested on an active basis.  Perhaps that is why I have not always been successful as an investor.  Perhaps that is why some of my investments failed.  I am becoming a true believer that as I am blessed with success, my real mission is to go back and try again.  Only this time as a smarter investor.  This time, I don’t need to be that investor that wants to show up once a year – a “Turkey Investor” – but, I need to be more committed to the neighborhood and look to invest in ways that the community needs.  I have learned to slow down, which as been hard and rather than act on my own, I wan to act in conjunction with others to have a real impact.

Perhaps, it is time to put a personal saying that I love to the ultimate test.  My father has always attributed our business success to helping others.  He has always said that if you help enough others get what they want in life, you can have anything you want in life.  The thought that has filled my mind over the past few weeks has been that as an investor, I am called to do so much more than simply identify my best returns.  I can do that every single day.  Believe me, when you have enough experience, both good and bad, you learn to evaluate better!  The thought that drives me to write this article is what if we all focused on R.O.C. first?  How much better could our R.O.I. be?

What do you think?
Photo: LaurenKates

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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.

10 Comments

  1. Wow! This is an oustanding article that seems to have taken what I have been thinking and put it into words. Now, I am not a successful investor in the same place that you are right now. I am just getting started. However, the past few months I have been attending some meetings as our city is updating their master plan. One of the goals is to bring the downtown area back to life. At this point, with not much for resources, I’m not sure how I’m going to help. This article did however give me more solidification that I want to focus exactly on the ROC. Thanks for the insights!

    • Chris Clothier

      Hey Austin –

      Thank you very much for the comments. It always means a lot to all of us writing on the blog when people jump in the conversation so make sure you comment on the articles if they drive you to join the conversation.

      This is a huge issue and a challenge for all of us in our communities so I love hearing that you are looking to get involved. We all need to understand just how big the challenge is and how our actions today may not really pay off with fruit for years to come.

      All the best to you as you get started.

      Chris

  2. Very well put together Chris. I always make an effort to introduce myself to several of the neighbors when I purchase a house. I make the trip myself each month to get rent and I really love it when the gal across the street waves and says “hi Kyle”. I enjoy feeling like part of the local area and I know they all appreciate it as well as they see I have a vested interest in the neighborhood and I show it. This is one of those things that doesn’t show up directly on paper but I firmly believe over time it give you better returns through many ways.

    1. Your improvements on the house encourage the neighbors to upgrade their home as they see it might be worth more since someone else is doing it too. Even just better yard maintenance or inexpensive landscaping can make a huge difference.
    2. Lower vacancy because you show you tenants you care about them and it also shows in the neighborhood and fosters that care there.
    3. By being involved you can take care of issues and problems much quicker which feeds back to happier tenants and keeps costs from rising by taking care of small issues before they become large issues.
    4. Maybe the biggest, opportunity!! It is amazing how many people you can open yourself up to by treating your tenants well and showing 4-5 households that you care.

    These items are priceless to ALL involved and that is truely the beauty of it.

    Great article! !

    • Chris Clothier

      Kyle –

      Your comments did a better job than mine at bringing it back around to some real life, small everyday issues with owning real estate. If you don;t care about your house, the surrounding neighborhood and most importantly the tenants, then you have no shot at really reaching the highest level as an investor. – In my opinion anyway!

      Have a great day and thanks again for commenting.

      Chris

  3. Sharon Vornholt

    Wow Chris. I will never forget the phrase “Turkey Investor”.

    I think that is a great idea to invest in whole neighborhoods. I don’t know how the small time investors will pull that off unless a group of them band together; possibly a like a REIA group or just a group of individual investors. Even though your company is bigger, I think it would still be hard but not impossible to pull off. I would certainly applaud you for trying.

    It would be interesting to see folks on this site throw ideas into a hat about how they would accomplish this goal of tackeling whole neighborhoods. I’m betting a whole lot of good ideas will come out of this group effort. I love this post.

    Sharon

    • Chris Clothier

      Hi Sharon –

      Thanks for the comments. I will tell you that meeting with the Mayor and then having him introduce us to one group downtown who then introduced us to a handful of other groups has been eye opening. It did not take long to get a sense that there were a lot of people doing a lot of things, but that everyone was trying to coordinate and start focusing combined efforts on similar if not the same tasks. I think the key is not trying to do it alone or not trying to do your own thing. We have had to be patient and willing to support others and not just run out there and decide what we are going to do. Everyone doing their own thing to help has ended up sprinkling change across a 500 square mile area and in the end no one notices a thing. So, the challenge will be supporting big initiatives and over time, change will happen.

      Hopefully…

      All the best – Chris

      • Chris –

        I think as others have pointed out, it really does “take a village” to make big changes. When people band together great things can happen. It sounds like you are on the right path, and I applaud you or anyone else that takes on this huge but much needed challenge.

        Sharon

  4. Chris,

    Your post intrigues me. Do you feel an area is blighted because residents need a helping hand or because residence are waiting for a handout? I don’t ask to be critical only to understand how you feel you can make an impact. As you say, its not a simple as giving turkeys at Christmas, there is far more to the dynamics of what makes a neighborhood.

    Jason

    • Chris Clothier

      Hey Jason –

      I think that there will always be both types of people in need that you mentioned above. Those that want help from others and those that want to help themselves, but others have to take action to help them get there. Every major city faces these exact same challenges and some are doing better than others at tackling the issues.

      I think what I am learning is that as an investor is that I cannot go into a neighborhood and buy up rental houses and fix them nice and expect that will change the area when there are no essential services nearby to provide basic needs like food, jobs, recreation just to name three. So I am looking at some commercial opportunities near where I want to invest in neighborhoods. I am working with other companies in the city to provide parks in the middle of neighborhoods and talking to other entrepreneurs about putting service businesses in commercial projects near the neighborhoods.

      Those things would provide some needed access to services that many of the blighted neighborhoods are cut off from. The reality is that in order for these things to happen, people are going to have to take chances. Entrepreneurs and business leaders are going to have to invest in these area. Otherwise, the cycle of accepting charity continues and there is no real way for neighborhoods to revitalize themselves. We can fix houses all day long, but values, rents and the success of those neighborhoods cannot rise without the other investments happening at the same time. This is just where my thought processes and opinions have evolved.

      I always appreciate your comment s and the questions.

      Chris

      • Thanks for the reply Chris. It gives me a much better idea of what you are looking at accomplishing.

        In my neighborhood the businesses got together and taxed themselves to create an improvement district. The city also kicked in 500k. They hold events, help businesses and work to improve the appeal of a once rundown area. http://www.onhavanastreet.com Tax revenues jumped from 170k to 1.6 million in one area of the district alone. This has further encouraged the city to focus on the area. This is just one of many ways the area has shown improvement. You said it best, the key is getting everyone together to focus on the area and pull in the same direction. People are amazing when they come together for a common purpose.

        I congratulate you on making the first big step. If I might ask, please keep us up to date and the challenges and improvements you help make for the area. I love seeing turnaround areas. The energy it gives to a community is almost intoxicating. (in a good way)

        Jason

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