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Michael Ablan
  • Real Estate Broker
  • Watertown, NY
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End of year summary: Successes, failures and a mobile home park

Michael Ablan
  • Real Estate Broker
  • Watertown, NY
Posted Nov 18 2018, 08:23

Hey Everyone,

I like to drop in here from time to time to talk about my journey as a real estate investor. I feel it's appropriate because I honestly don't think I'd be where I am today without this website and community. I'm hoping my tale can inspire anyone reading this to always strive for more, never take no for an answer, and don't be afraid to stretch yourself beyond your perceived limitations.

For a little back story, here's my first real post on BP when I started (beware, I'm a long winded sob)

https://www.biggerpockets.com/forums/223/topics/371714-making-my-splash-in-real-estate-6-units-in-11-months

I started 2018 owning 10 properties, 15 total units. I had completed 3 small wholesale deals, but no actual fix and flips. I had achieved top producer status as a real estate agent in my first year of 2017. My momentum was really beginning to build, so I set a seemingly ludicrous goal of 100 units and 10 completed flips by the end of 2018.

I'm proud to say that I'm incredibly close to reaching that goal. We are currently sitting at

  • 58 units total units owned
  • 53 additional units available to us the moment we have the financing to bring them down
  • 4 completed flips
  • 3 flips in the finishing stages
  • 3 wholesales
  • We own and operate 2 AirBNB properties
  • We own a 20 lot mobile home park
  • We purchased a historic limestone Inn which we will be converting into 17 apartments geared towards servicing our military clientele
  • I earned top producer status for my 2nd year and am opening my owner brokerage
  • I'd like to go into detail on not only the keys to my success this year, but also highlight how extremely important my failures are to my success. They're what kick me into my extra gears.

Lessons:

You're only as good as the people you surround yourself with

The catalyst in my business was when I decided to take on a partner. This was NOT an easy choice for me. I'm naturally hyper, impatient and a control freak. However, I'm also very self-aware and borderline obsessed with personal development. I recognized quickly that I couldn't continue to scale this thing by myself, so I brought in a partner who had the same vision and work ethic as me. His involvement freed me up from doing the things I wasn't very good at, so that I could focus on my strengths. This in turn allowed me the time to find more rockstars to bring into our business. Without these key people, we could never sustain the work flow I was bringing in. At one time we were doing 9 projects at once, something that would have been impossible with the help of other people.

Always run your numbers conservatively. Budget an additional 10% for unforseen.

I started out doing all of our own work. I inspected the property, created the scope of work, priced the material, estimated labor hours, ect. I would keep track of everything in a spreadsheet and evaluate it during and after the job is complete. I can walk into a room and tell you how much it should cost just by the sqft. Yet, despite my growing skills, I would go over budget Every. Single. Time. There was no predicting how it was going to happen. Sometime's we'd open a ceiling and find rotted joists. We've opened walls to find hidden knob and tube in service. We've had half a roof blow off in a wind storm because the previous owner's contractor didn't install correctly. Sometimes you're contractors get sick, or your materials get delayed. Sometimes you're original plan just isn't going to work and you need to change order. You never know, and you will never know. So moving forward, I always run my budgets high, and I add an additional 10% for the unforeseen. This prevents me from wasting my time on projects that have numbers that barely work if everything goes perfectly.

It's all about the numbers. Leave your emotions in the bedroom.

I can often fall victim to hubris. I'll look at a deal and start reveling in the fame and fortune that will come when I pull it off. I'll flood my brain with dopamine as I envision the faces of my prospective tenants when they walk through the apartment, or a young familys excitement when buying their first home. These are some of the reasons I invest, and these are the emotions that put me in a position to lose money on my first flip this year. I found a house that had everything going for it. Amazing location, minimal work, newer build, ect. I got it under contract as a short sale for a great price and was getting super pumped about the buy. The next 3 months dragged by. Although the bank accepted my offer, they refused to get the process in motion. Then, out of nowhere they called and said the deal was dead unless I came up $15k. The numbers still worked, so I agreed. 2 weeks before closing, I did another walk through and to my dismay found an entire house filled with mold. 1600 sqft of black mold. Walls, ceilings, cabinetry, insulation, studs. Everything. What was once a 3 week cosmetic rehab, was now a 2-3 month full gut. I should have walked. Scratch that. I should have ran. But I didn't. I allowed myself to get emotionally invested in the deal. I re-ran the new numbers, repulled comps and started stretching the numbers. In the end, the renovation cost went over and the market didn't feel the house was worth the higher ARV I was trying to justify. Our team did an amazing job on the rehab, and it came out beautiful, but the numbers are the numbers and there's no changing that.

Under promise, over deliver

This was the year I started reaching out to private individuals for money to fund my deals. Previously I had only used cash, credit cards and banks to get my deals done, so I didn't have pitch my plans and projects to anyone. Upon making the switch to private individuals, I found myself having to sell myself and my project to people who knew nothing about me. I would give realistic numbers and timelines based on my experiences, but I again wasn't budgeting for the unforeseen. I was confident in my work ethic and my teams ability to do our job well. However, as usual, we ran into the unforseen and the project went over budget, and the timeline was extended. Fortunately I was able to cover most of the additional expenses from the overage, but it wasn't fair to my partner into such a risky and stressful position. In future I will allows be projecting the worst possible scenario. If the deal is good enough given those numbers, then it's worth taking the risk. Plus I'll look like an investing wizard when it's finished early and under budget.

Get yourself comfortable with having uncomfortable conversations

This is something I have to work on every day. I hate conflict and I don't like telling people no. However, the success of this business hinges on your ability to weed through the masses in search of the best tenants, employees, contractors and partners available to you. The only way to find these people is to have face to face conversations that don't always end in smiles or pleasantry. People will be lazy, they'll steal from you, they'll cut corners, and they'll lie to you. It's your job to identify it when it happens and learn how to handle the situation in a calm and professional manner.

Be long to hire, and quick to fire

My worst and most costly business relationships were those that came from a desperate need to fill the position quick. I would meet with them once, ask them questions and hire them if they answered them to my satisfaction and could start immediately. It's a warning sign right out the gate if someone can start a job immediately. There's a reason they're unemployed and it's up to you to find out why. Whether it's contractors, lawyers, suppliers or partners, I always try to meet with and communicate with these people several different times before agreeing to do business with them. . Everyone hides behind a mask, especially when speaking with strangers. A contractor might seem like a great communicator the first time you speak with him, but what about the 2nd time? Does he still answer or return your calls in a timely manner? How about the 3rd time? Is he getting back to you the next day instead of the same day? How about the 4th? Did he even call you back? Don't get me wrong, I'm not suggesting you interrupt these people and waste their time with idle chit chat. But you want to make sure that they are predictable and consistent, because that's a direct reflection on what you can expect to get from them in the work place.

Get everything in writing and communicate expectations clearly

People can't read minds. In order to get your desired outcome, you must be able to communicate a clear message on what you want. Do you need the deal closed in 30 days in order to keep your promise with your seller? Then you need to tell this to your title company, lawyer, abstractor, and lender. You need to have a clear conversation on what your needs are and explicitly ask if they are capable of doing what it takes to make that happen. If they can't do it, then you need to find someone who can. How about the renovation on your house? You can't enter a relationship expecting to get exactly what you want, without first detailing what that is exactly. You need to break it down to every minute detail, so they can see what you're seeing in your head. Don't give vague instructions on how you want the work done and then get mad when it comes out completely different than what you had envisioned in your head. Eventually as you work with someone over a long period of time, you'll learn what to expect from each other and can relax on the formalities. But in the beginning, always have everything in writing, in extensive detail and thoroughly discussed.

Invest in yourself and network

My first year in the business I put my nose to the grindstone and spent all of my time working on my properties to get them rehabbed and rented. I listened to bigger pockets religiously, but barely participated in the forum. I would meet tons of people while working as an agent, but wouldn't talk to them about what I was doing as an investor. I was missing valuable opportunities to market myself and what I was doing. So I began making a point to tell everyone what I do. I tell them what I need and what I'm looking for. I went to my first real estate conference in Chicago (Shout out to Midwest Real Estate Network Summit), and found a HML that instantly solved my financing problems. I also started helping people on bigger pockets and found several people to partner with to bring down deals that I wouldn't have been able to bring down alone. Networking and helping has accelerated the pace in which my business has been able to grow. It has also added a layer of depth to my personal development as an individual and as a business owner. It's not easy and it's not comfortable, but it's also not as scary as it seems.

Never get comfortable

I don't think there's been a deal yet where I haven't sat back and thought "How the hell am I going to pull this one off". Whether its finding the financing, handling the rehab, or getting the deal to the finish line, I'm always biting off more than I can chew. I'm currently trying to figure out how I'm going to buy a 32 unit portfolio, 2x 8 unit buildings, convert an old inn into 17 apartments, convert an old nursing home into 9 apartments, as well as wrapping up the flips and rental rehabs we have in works now. I'm always taking on projects and doing volume that stresses and often times breaks the current systems we have in place. But this in my opinion is the best and fastest way to grow. We are taught that taking risks and failing is bad, but I'm a firm believer that it's the only way we can achieve truly evolve into the best versions of ourselves.

Write down your goals.

Break them down in year long goals, 6 month goals, 3 month goals, month goals. Work in reverse and break down what you can do TODAY to achieve those goals. The best way to get somewhere is to know where you're going. In order to know where you're going, you must make a plan. By making this plan, you can help drown out all the noise and focus on making the small steps that will eventually lead you to where you want to go.

With that said, my 2019 goals are as follows:

  • 1.Develop and prefect operational systems that allow me the time to focus on tasks best suited to my strengths
  • 2.Own and operate 500 units
  • 3.Synchronize my brokerage, property management, construction and flip companies
  • 4.Put together my first large multi-family syndication
  • 5.Help a newbie establish themselves in real estate
  • 6.Invest in a new asset class, such as tax liens or non-performing notes

Thank you to everyone at Biggerpockets. Without this platform and the generosity of this community I wouldn't be where I am today. I hope to give back what I've received over time.

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