You will have to do ugly things to get ahead in real estate

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Originally posted by @Linda West :

If they are things you wouldn't be comfortable talking about here or elsewhere, why post this thread?

Do you ever get the sense that in real estate education there are loads on loads on loads of things that have been sanitized-for-your-protection? I do, all the time.

Originally posted by @Bruce Woodruff :

Jim said this: "Have you ever caught yourself looking at a bunch of black kids playing on a street you own a property on and wishing they were white kids so that your property value would go up?"

The definition of racist is this: "having, reflecting, or fostering the belief that race is a fundamental determinant of human traits and capacities and that racial differences produce an inherent superiority of a particular race" - Merriam Webster

So actually Jim did not make a racist statement, not a word about one race being superior.....at worst we could call it prejudiced or biased......



I find it interesting that of the four examples of ugliness Jim gave, only the one about skin color pushed anyone's buttons . . .

Those who would do “ugly” things probably wouldn’t consider them “ugly”. It is those with a perception of “higher moral ground” that would define the “ugly” of an action.

Those who might be considered as being on lower moral ground would probably consider the highly moral people as suckers and bad business people.

I would bet that people on both groups make money, but trust that those who bring wins for the most parties involved outlast those who only look out for their own interests.

I believe people mostly operate within our comfort zones.

Thoughts:

1. I've known Jim on here for a long time. He can be controversial because he's not afraid to say out loud sometimes what others are thinking. I don't think the man has a deliberate racist bone in his body. His statement was done for illustration of the "ugliness" that he alluded to on the start of this thread.

2. We are all human beings and no one can escape having done something that, if you really pondered it, you might be embarrassed about or ashamed of later. Some of it might be overt ugliness, and some of it might be covert. Have you ever declined to look at a house because of the address? Could it have been because you already know it's in a [insert demographic here: black, gay, latino, asian, etc] neighborhood? Maybe you didn't consciously think that, but if it was a good price and seemed to be a good deal and you demurred anyway, why? What about just going along with the crowd: "I'm not racist, but I wouldn't buy a house in a [insert demographic here] neighborhood because that would be difficult to rent because everyone else is racist." I believe the wo/man that would stand up and declare they've never just gone along to avoid difficulty would largely be dishonest. 

3. Because we are all humans, I think the best we can do is the best we can do, admit our shortcomings, and try to do better as we go along. I don't think there's anything wrong with falling short of ideals if you're honestly striving for them.

4. I make no apologies whatsoever for making money with rental properties. I take dilapidated houses that destroy the value of neighborhoods and attract undesirable elements to a neighborhood, make them nice, add modern amenities, and rent them out to decent people at a fair price that is usually slightly/somewhat below market rates. The people who live in my homes live better than they likely would anywhere else but for my efforts. The city collects greater tax dollars from my property thanks to the improvements, which benefits everyone in the city. The profits I make allow me to help support my family, which gives me the bandwidth to keep doing this, and also allows me to continue to turn trash into treasure. We were on the vanguard which turned our rental market in my little corner of the world from dumps to nice housing. 

5. I say about rental properties the same thing I say about public service: someone will do these jobs. Either good, decent people - of which I count myself - will do them, or bums will do them, but someone will do them. Ask yourself each morning if you'd rather have a good person doing the job, with all their shortcomings, or a bum doing the job, and you'll know how to proceed. 

Originally posted by @JD Martin :

Thoughts:

1. I've known Jim on here for a long time. He can be controversial because he's not afraid to say out loud sometimes what others are thinking. I don't think the man has a deliberate racist bone in his body. His statement was done for illustration of the "ugliness" that he alluded to on the start of this thread.

2. We are all human beings and no one can escape having done something that, if you really pondered it, you might be embarrassed about or ashamed of later. Some of it might be overt ugliness, and some of it might be covert. Have you ever declined to look at a house because of the address? Could it have been because you already know it's in a [insert demographic here: black, gay, latino, asian, etc] neighborhood? Maybe you didn't consciously think that, but if it was a good price and seemed to be a good deal and you demurred anyway, why? What about just going along with the crowd: "I'm not racist, but I wouldn't buy a house in a [insert demographic here] neighborhood because that would be difficult to rent because everyone else is racist." I believe the wo/man that would stand up and declare they've never just gone along to avoid difficulty would largely be dishonest. 

3. Because we are all humans, I think the best we can do is the best we can do, admit our shortcomings, and try to do better as we go along. I don't think there's anything wrong with falling short of ideals if you're honestly striving for them.

4. I make no apologies whatsoever for making money with rental properties. I take dilapidated houses that destroy the value of neighborhoods and attract undesirable elements to a neighborhood, make them nice, add modern amenities, and rent them out to decent people at a fair price that is usually slightly/somewhat below market rates. The people who live in my homes live better than they likely would anywhere else but for my efforts. The city collects greater tax dollars from my property thanks to the improvements, which benefits everyone in the city. The profits I make allow me to help support my family, which gives me the bandwidth to keep doing this, and also allows me to continue to turn trash into treasure. We were on the vanguard which turned our rental market in my little corner of the world from dumps to nice housing. 

5. I say about rental properties the same thing I say about public service: someone will do these jobs. Either good, decent people - of which I count myself - will do them, or bums will do them, but someone will do them. Ask yourself each morning if you'd rather have a good person doing the job, with all their shortcomings, or a bum doing the job, and you'll know how to proceed. 

Thank you so much for the kind words, JD.

Originally posted by @Sylvia B. :


I find it interesting that of the four examples of ugliness Jim gave, only the one about skin color pushed anyone's buttons . . .

Only person who's picked up on this, Sylvia It is pretty curious, isn't it?

This was an extremely thought provoking question. I think it's one that every REI goes through many times in their existence. I thought about this for a while before responding. Here's what I came up with:

If you asked "do we all have to make tough choices", I would agree with that statement 100%.  There's a reason why the flight attendant tells the mothers to put on their oxygen mask before they put on their children's.  "Ugly" is subjective, and every decision we make has a domino effect on everything that happens in the string of decisions after that.  Where do we draw the line?  If we have a series of non-payments (see Covid), that impacts not only the non-payers but has a domino effect on the financial stability of the "payer's" properties, won't the decisions we make with regard to the non-payers (when Covid restrictions lift) impact those that do pay?  We have a responsibility to ALL of the tenants/properties...and our own families as well as any employees and team members that are impacted by our loss of revenue.  It's not that simple. We can't exclude what the impact of every decision we make is on those that are not in our immediate view when making those decisions.

Sometimes, choosing the "ugly" decision can keep everything else "pretty", and making a shortsighted "pretty" decision, can turn everything that follow very "ugly".

Originally posted by @Joe Villeneuve :

This was an extremely thought provoking question. I think it's one that every REI goes through many times in their existence. I thought about this for a while before responding. Here's what I came up with:

If you asked "do we all have to make tough choices", I would agree with that statement 100%.  There's a reason why the flight attendant tells the mothers to put on their oxygen mask before they put on their children's.  "Ugly" is subjective, and every decision we make has a domino effect on everything that happens in the string of decisions after that.  Where do we draw the line?  If we have a series of non-payments (see Covid), that impacts not only the non-payers but has a domino effect on the financial stability of the "payer's" properties, won't the decisions we make with regard to the non-payers (when Covid restrictions lift) impact those that do pay?  We have a responsibility to ALL of the tenants/properties...and our own families as well as any employees and team members that are impacted by our loss of revenue.  It's not that simple. We can't exclude what the impact of every decision we make is on those that are not in our immediate view when making those decisions.

Sometimes, choosing the "ugly" decision can keep everything else "pretty", and making a shortsighted "pretty" decision, can turn everything that follow very "ugly".

there is ugly in every niche of real estate I think we all know the ugly as it relates to being a landlord.

However the most ugly to me is when I was a very active courthouse steps buyer.  And buying a home that was owner occuppied and having to deal with the owner who just lost their home..  These were Ugly scenarios.  I posted above how one turned into a win win for the person who lost the home and a financial windfall for me.

but lets look at the truly ugly.  the 3 suicide attempts I had.. One successful  two stomach pumped and lived.  Successful was by hand gun.

this is / was ugly and it caused me to change my tactic to where I would no longer buy owner occ foreclosures.  Or fund deals for others with hold over owners in any manner given the eviction issues. 

So there are degree's of ugly in our business.. and in my mind tenants are basically the least ugly we deal with.. We all know the score there.

@Jim K. I saw you have a humanities background. I was a history teacher way back, so I have a fair amount of understanding where being a landlord conjures images of evil.

However, landlording is starting to change. Not all, but many are making communities better.

For my part, my business partner and I provide affordable section 8 housing to families on the south side.

When I think about bad things we have done, this is the only incident that comes to mind.

We checked out a property to purchase. As we pulled up a pit bull came running out. The owner came out chasing it with a gold plated pistol in his holster. We got the wrong vibes and decided not to purchase properties on that block. Not safe enough for us or our contractors.

Otherwise, we spend most of our time and efforts returning Victorian Era homes to their glory for low-income tenants to rent. By the way, it is very profitable because we work with Section 8 tenants.

We are adding more environmentally friendly features to properties we rehab as well. That is being updated right now, but we spend money on features that reduce energy. Not talking about solar panels but safe insulation and low energy appliances and light bulbs.

My advice (or $.02 for all it is worth), don't think about what you can do wrong or the money. It is great, and a definite benefit. The real benefit to investing is applying real changes outside the theoretical. You leverage money and time to create a better future. Those who don't agree don't have to be your partners.

I had bad partners in the past. The people I work with now are so much better.

Originally posted by @Jay Hinrichs :
Originally posted by @Joe Villeneuve:

This was an extremely thought provoking question. I think it's one that every REI goes through many times in their existence. I thought about this for a while before responding. Here's what I came up with:

If you asked "do we all have to make tough choices", I would agree with that statement 100%.  There's a reason why the flight attendant tells the mothers to put on their oxygen mask before they put on their children's.  "Ugly" is subjective, and every decision we make has a domino effect on everything that happens in the string of decisions after that.  Where do we draw the line?  If we have a series of non-payments (see Covid), that impacts not only the non-payers but has a domino effect on the financial stability of the "payer's" properties, won't the decisions we make with regard to the non-payers (when Covid restrictions lift) impact those that do pay?  We have a responsibility to ALL of the tenants/properties...and our own families as well as any employees and team members that are impacted by our loss of revenue.  It's not that simple. We can't exclude what the impact of every decision we make is on those that are not in our immediate view when making those decisions.

Sometimes, choosing the "ugly" decision can keep everything else "pretty", and making a shortsighted "pretty" decision, can turn everything that follow very "ugly".

there is ugly in every niche of real estate I think we all know the ugly as it relates to being a landlord.

However the most ugly to me is when I was a very active courthouse steps buyer.  And buying a home that was owner occuppied and having to deal with the owner who just lost their home..  These were Ugly scenarios.  I posted above how one turned into a win win for the person who lost the home and a financial windfall for me.

but lets look at the truly ugly.  the 3 suicide attempts I had.. One successful  two stomach pumped and lived.  Successful was by hand gun.

this is / was ugly and it caused me to change my tactic to where I would no longer buy owner occ foreclosures.  Or fund deals for others with hold over owners in any manner given the eviction issues. 

So there are degree's of ugly in our business.. and in my mind tenants are basically the least ugly we deal with.. We all know the score there.

Can't even imagine what you went through (yes, the tenants...I know).  Glad I never did tenant Occ FC.  I never wanted to be put in a position like you described above...even without those extremes.  Now I'm glad I stayed out of it.

Originally posted by @Andy Nathan :

@Jim K. I saw you have a humanities background. I was a history teacher way back, so I have a fair amount of understanding where being a landlord conjures images of evil.

However, landlording is starting to change. Not all, but many are making communities better.

For my part, my business partner and I provide affordable section 8 housing to families on the south side.

When I think about bad things we have done, this is the only incident that comes to mind.

We checked out a property to purchase. As we pulled up a pit bull came running out. The owner came out chasing it with a gold plated pistol in his holster. We got the wrong vibes and decided not to purchase properties on that block. Not safe enough for us or our contractors.

Otherwise, we spend most of our time and efforts returning Victorian Era homes to their glory for low-income tenants to rent. By the way, it is very profitable because we work with Section 8 tenants.

We are adding more environmentally friendly features to properties we rehab as well. That is being updated right now, but we spend money on features that reduce energy. Not talking about solar panels but safe insulation and low energy appliances and light bulbs.

My advice (or $.02 for all it is worth), don't think about what you can do wrong or the money. It is great, and a definite benefit. The real benefit to investing is applying real changes outside the theoretical. You leverage money and time to create a better future. Those who don't agree don't have to be your partners.

I had bad partners in the past. The people I work with now are so much better.

 You're a good man, Gunga Din. 

@Kris L. Those houses can sometimes be a blessing. I have a friend who purchased a hoarder house expecting to make $60k after his fix and flip. But by getting dirty (lol) he found that the hoarder was into photography left hundreds of cameras and photography equipment which he has sold and is still selling so far has made and extra $75k above and beyond his initial expected profit. So, the lesson here some times it pay to be play dirty. 🙂

Completely and utterly disagree. I haven't done a single ugly thing, I have probably been too nice so far in my real estate career. I have become a multimillionaire through real estate, and have remained a good, ethical person. So yea, this is false :) 

Love ya!

Originally posted by @Jay Hinrichs :
Originally posted by @Eric Bilderback:

You have to buy real estate to get ahead in real estate.


Besides the one time I had to throw all of the sick orphans  out during that freezing cold Christmas!  LOL

here is a cautionary tale. of potential ugly to well a nice profit

1. buy a courthouse steps property in Aloha Oregon.

2. knock on door  older lady she has what I could surmize as at least 4 to 5 disabled children.. some wearing diapers ( teenagers) smell of urine very strong. 

3. Her older kids talked her into a liar loan then took the refi money and she could not make the payments ( pretty common kids do this to their parents quite frequently actually).. hires a wholesaler that is going to bail her out.. wholesaler does not come through she lose's the house and I buy it fair and square at court house.  for better or worse in courthouse steps bizz  sight unseen other than the front.

4. I am now on the porch talking to her and all I can think of is I am going to be on the evening news evicting this very sad group of people.

5. She then tells me that the well and part of the septic are on the neighbors property which is the uncle.  My mind right away flash's to there is no way they are going to give me an easement to those things given the situation.

6. Then she just happens to mention she owns the 4 acres behind her free and clear..  I know this property is in a transition zone IE just brought into the UGB and city of HIllsboro actually.  So my mind says Hey I think this is going to be a land play and long term hold.

7. I paid 130k at the court house for the house and 1/2 acre.. so well normally we like to spin our money but investing 130k with no income on bare land with upside  thats not bad..

8. Tell her to go talk to her attorney and come up with an asking price for the 4 acres its worth far more than the 130k.. and I have the means to make up the difference..  The attorney comes back with 250k for the 4 acres.. I said done.. I will deed you the house free and clear and cut her a check for 120k.. and then i have a heart to heart with her.. do not let your kids near this money and Do NOT ever borrow against your home again.

9. 6 months later a big developer comes in and is doing a land assemblage.. I was thinking this would be 5 year hold at least.

10. Bottom line 16 months or so later we closed at 975k cash ..

11. Today its a big housing community with her house as a hold out and she still lives there.

what was going to be hugely ugly turned out to OK for all concerned.. I got lucky on how fast the property sold.. the Owner got very lucky that another investor who would not have taken the time to figure out what was going on or worse.. did not have the ability to do anything but get their money out..   Ugly turned into win win.

Glad that worked out for you.  If she didn’t have that land though I assume you would have evicted her and her kids?  What choice would you really have?  It might have been your last deal you may have had to join a monastery after evicting that family!

Originally posted by @Eric Bilderback :
Originally posted by @Jay Hinrichs:
Originally posted by @Eric Bilderback:

You have to buy real estate to get ahead in real estate.


Besides the one time I had to throw all of the sick orphans  out during that freezing cold Christmas!  LOL

here is a cautionary tale. of potential ugly to well a nice profit

1. buy a courthouse steps property in Aloha Oregon.

2. knock on door  older lady she has what I could surmize as at least 4 to 5 disabled children.. some wearing diapers ( teenagers) smell of urine very strong. 

3. Her older kids talked her into a liar loan then took the refi money and she could not make the payments ( pretty common kids do this to their parents quite frequently actually).. hires a wholesaler that is going to bail her out.. wholesaler does not come through she lose's the house and I buy it fair and square at court house.  for better or worse in courthouse steps bizz  sight unseen other than the front.

4. I am now on the porch talking to her and all I can think of is I am going to be on the evening news evicting this very sad group of people.

5. She then tells me that the well and part of the septic are on the neighbors property which is the uncle.  My mind right away flash's to there is no way they are going to give me an easement to those things given the situation.

6. Then she just happens to mention she owns the 4 acres behind her free and clear..  I know this property is in a transition zone IE just brought into the UGB and city of HIllsboro actually.  So my mind says Hey I think this is going to be a land play and long term hold.

7. I paid 130k at the court house for the house and 1/2 acre.. so well normally we like to spin our money but investing 130k with no income on bare land with upside  thats not bad..

8. Tell her to go talk to her attorney and come up with an asking price for the 4 acres its worth far more than the 130k.. and I have the means to make up the difference..  The attorney comes back with 250k for the 4 acres.. I said done.. I will deed you the house free and clear and cut her a check for 120k.. and then i have a heart to heart with her.. do not let your kids near this money and Do NOT ever borrow against your home again.

9. 6 months later a big developer comes in and is doing a land assemblage.. I was thinking this would be 5 year hold at least.

10. Bottom line 16 months or so later we closed at 975k cash ..

11. Today its a big housing community with her house as a hold out and she still lives there.

what was going to be hugely ugly turned out to OK for all concerned.. I got lucky on how fast the property sold.. the Owner got very lucky that another investor who would not have taken the time to figure out what was going on or worse.. did not have the ability to do anything but get their money out..   Ugly turned into win win.

Glad that worked out for you.  If she didn’t have that land though I assume you would have evicted her and her kids?  What choice would you really have?  It might have been your last deal you may have had to join a monastery after evicting that family!

If the land did not work next step was relatives who may or may not know she lost the family property uncle lived next door.. I have had that scenario before were relative came in and bailed them out.. I would have looked at land contract as well.. Last resort would have been eviction.. As I stated above I had had 3 suicides one successful so did not want to go there with this family..  THAT IS THE DEFINITION of UGLY.

as a side note I have a good friend that lives in Broken top retired.. and was looking for something to do and had always thought about foreclosure investing.. so I get Deschutes county all loaded up and he starts to drive a few properties..   Then calls me and said NO way he can do this.. He said he donates at the church to help people in this situation and would not feel right buying the homes.. Nasty and UGLY is the court house steps business. 

I am OK funding vacant abandoned or if a tenant is in there..  those can get interesting. the Tenant has the right to stay for the entire lease term.. so you cant just evict them.. but they do have to pay and it cant be a fake lease at far below market value.  People will try that one.

I had one in Clackamas were the people living there were buying on a lease option and did not know the house was lost.. they had paid 20k for the option and premium rent.. I did let them lease from me for more than a year.. They worked for BuyMart which was employee owned and when it went public they got a little less than 1 mil in stock and sold enough to pay me off.. so that worked.  But to be quite frank and Honest I am one of the few that work with holdovers or did work with holdovers my competition would not even bang on the door they just hired an eviction company and went for it.. now with the new rules thats changed of course.   ITS and UGLY side of the business being a landlord is just vanilla compared to this.

@Jim K.

I dont get your question. I think you have to pull the trigger and have guts. Stop the research via analysis paralysis and jump in.

Originally posted by @Mark Cruse :

@Bruce Woodruff of course we know racism doesnt exist. Black folks just have nothing better to do but make things up all day instead of working. Making america great...............

C'mon man, you're smarter than that.....of course it exists.... it always has and always will. My point is that there are people that just sit around and wait for somebody to say whatever word is triggering them this week. Rather than argue over silly **** like this thread, why don't we all work to fix the problem...?