"The world doesn't come to the clever folks, it comes to the stubborn, obstinate, one-idea-at-a-time people."
Mary Roberts Rinehart
"If liberty means anything at all, it means the right to tell people what they do not want to hear."
George Orwell
In this small story, I want to show you how I entered into real estate investments, making bad mistakes, taking risks, living in a depressed neighborhood and finally making some profit.
My family came to the US in December 2016. We did not have much money, no work, no experience, and a lot of hopes and fears. One of the hopes I had was to find my way in real estate investments. I was inspired by Robert Kiyosaki's book... you all know the name of it!
In November 2018, I purchased a $63,000 ruined house on the South Side of Chicago, in an African-American neighborhood, and started renovating it, both with my own hands and with outside experts in plumbing, electrical, etc. By February 2019, I had already invested about $60,000 in this house. No loans were involved, so I had no more cash at that time, and "the cart was still there" - that is, the house required a GIGANTIC investment (and they exceeded the planned).
In February 2019, my two kids, my wife, and I were living in a one-bedroom apartment in a very old house with poor repairs, but in the heart of downtown Chicago. We were living in poor conditions just for the sake of a very good school. My spouse Luba at that point was very tired of these living conditions, the income instability, and the investment in the house, which she felt was my personal big mistake. But I insisted that I would renovate the property one way or another, even though it was clear at that point that the project could only be unprofitable. Luba once demanded that I sell this house "as is", for any money.
In February 2019, I had almost no work, and I decided to attend a seminar about real estate investments. The three-day seminar was (and is) led by some pretty well-known investors and realtors in Chicago. I gave a short presentation of my house with calculations of the money invested in it and offered these investors how much money they could give for it. They offered no more than $60,000. You may think I wanted to sell the house. Absolutely not. I wanted to make sure it was an unreasonable loss of the huge (to me) cash flow I had gained by working over 3,000 hours a year in the construction sphere. So, these smart-*** investors gave me a good "kick in the butt" - and I started investing my time on weekends, in the evenings, when there were no outside orders.
By December 2019, the house was 80% complete, we moved in in May 2020, and I kept improving it until February 2021, when the kids got the second floor as their bedrooms and the basement as a gym for their workouts.
The "dark side" of this process of living is here. We moved to the South Side of Chicago in May 2020. My wife and I had a conflict about this. She was very afraid of moving to this neighborhood because there was a strong belief among Americans and Russian-speaking immigrants that this neighborhood was criminal, full of murderers, drug dealers, and thieves. This was (and still is) partially true, but ... danger always looks bigger through the eyes of fear.
My wife was scared of driving there (not even walking). I put her and the kids to the test. And for that, I apologize to them. It took almost three years of our lives, and we had no normal socializing (we avoided it, to be honest). I have experience living in Kazan, USSR, during the Kazan Syndrome period (gangs on the streets in 1984 -1989), and I know exactly what kind of people they are, so I had no desire to socialize and make friends.
But there are also good sides to the story about this property.
First of all, the kids practiced at one of the best tennis clubs for free, because they lived on the South Side of Chicago - that's the mission of the club: to help local residents. I don't think they expected Russian immigrants to live there, but anyway.
Secondly, the children switched to Home Schooling (online education) much earlier - before the pandemic started. This move was motivated by the desire to play tennis professionally, and such lessons involve schedules that are at odds with those of any school other than online. Thus, living in a depressed neighborhood, we were not tied to a low-rating school.
In 2021, the real estate market rose beyond expectations. Real estate price increases in one year ranged from 20 to 40% across the US. Our house, in which I invested more than $150,000, purchased for $63,000, could be sold in February 2021 in that repair for $225,000 (which already made sense: if I sold - I would not lose anything, at least). In January-February 2022 the price of this property could be more than $300,000. The growth was unreal and exceeded all my calculations (very conservative, by the way).
Was I lucky? I just didn't want to lose everything and kept working, "making things beautiful". However, I did not do everything perfectly (many things - for the first time in my life). Nevertheless, the house was renovated. Finally, it was sold on May 17, 2023, for $265,000 (check it out: https://www.redfin.com/IL/Chicago/8903-S-Union-Ave-60620/home/13108431). In the short term the investment was not profitable, in the long run, appreciation and market changes gave me some moderate profit. It did not make my pockets bigger, but it did not let me fall.
