(This is a quick overview “MY STORY” of my life, mostly to highlight the victories, challenges, and roller coasters we all ride in life. I offer some lessons that I learned at some points, and hopefully my perspective and experiences can help at least one person. Plus, some of you have just simply asked to learn more about me…)
I confess that I’ve been struggling with offering you deeper, better blog posts lately. I feel like I may have phoned some in or been a little more superficial. I have been dealing with a relative in distress and I am considering a big change in my life now also. I wish to return to telling you better, deeper, more meaningful things….
In the last chapter, I was going to start telling you about how I was hired to a large bank for the first time and how well things went for some time……had I not had the previous denials, challenges and even failures, I would not have had this new job at the bank. Those doors that were closed may or may not have been good for me, we will never know, but certainly when I started this new job at the bank, I was very happy to be there……
Here I was, a guy that had been in the kitchen industry, with some experience in federal intelligence analysis and also the datacom business, was now a lender and banker. I loved it. They needed someone with good communications to come in and make things better internally while reaching out externally.
I would go from branch to branch talking to other colleagues and educating them on my programs. Then I’d either get referrals internally, or I would generate deals myself. There was such a variety, which I loved. One day I was working with a pediatrician, then a manufacturer of septic tanks, then a high tech firm, then a franchise, then a convenience store, etc. etc. I kept doing well and they gave me an additional territory. I would travel to that area, out of state, once a month. I loved it!
Soon I started earning lots more money. Life was good. I was able to send my daughters to a great private school. That school not only offered good stuff for them, my wife and I made great, great friends there. I continued to do well and decided to pursue my life long dream of real estate investing.
So, after asking a client of mine, who had done well in real estate, I took a real estate investment course, per his suggestion. I learned a lot. It was good. Like any other business or thing in life, I learned that having a system of some sort is important.
Whether you are marketing, selling, operating a franchise, flying a plane, perfecting a sport, or investing in real estate, you need to watch and learn what others do, copy it, and make a system – then follow it!
So I learned a system, got all the spreadsheets, etc. etc. I went on a search for my first property. First, I had ‘paralysis of analysis’. I would overanalyze a property and just never do it. FInally I came across two properties.
You see, at that time I had excellent credit. I was making lots of money. Our expenses were pretty low, and the banks were lending money like crazy. Everyone was buying investment properties. It was a crazy time and we all wanted to get into it…….so I came across these two properties. There was potential and I was very excited. I could already see the profit after I flipped them and I even started to spend it one a guy’s weekend with friends.
You see, I let the hysteria and my emotions get the best of me. I abandoned the system, the education, the real estate investment course. I just went ahead and invested without much if any analysis. First Mistake. I figured that I had enough money if things didn’t work out exactly as planned, and the economy was going great, how could I lose?
One property was located on a long street in a good, middle class area where I grew up. I knew the area well. Within two blocks there was only one other house for sale, and it had foundation issues. Yet houses elsewhere in the neighborhood were selling like crazy. So I decided that I wanted to do all of the work and remodeling myself. Second Mistake. While I enjoyed it and learned much, doing it myself was not part of the system. It also took much longer to do. Had I hired professionals, I could have flipped the house in about 1 month. Instead it took me over two months to do it all.
When I finished the remodeling and put the home up for sale, many, many houses on the street were for sale. Everyone was trying to cash in on the timing. THen the real estate market began to change and fell. My home sat vacant for 15 months. I sold it for a loss. Too big of a loss. It hurt.
The other home was going to be a rental. Again an area I knew, but I didn’t analyze the home well at all. I found some tenants but didn’t use a property manager because I wanted to save money. She was a medical professional, he was a craftsman, so I thought they’d be good tenants. They were not. Finally after over a year, I was able to get them out of the house (because I was too soft on them) they owed me thousands of dollars in rent.
They had changed the locks so I had to get the locks replaced. When I finally got in the house I found all the carpet ruined, they stopped paying the gas bill so the heat was off and pipes were frozen, the basement was trashed, the bathtub had leaked many times into the kitchen below, and all sorts of repairs were needed. Unrelated, the siding was an old wooden siding that had been painted many times and was now falling off. Neighbors had been complaining and the borough wrote me a nasty letter, and I couldn’t blame them.
So I had to get new siding, $2000 worth of new pipes, $2000 in carpet, ceiling repairs, toilet and shower repairs, and paint the whole inside. What a mess, time and money lost.
I finally finished that and had lost months of rent. I noticed that my wife had been asking to move over more and more funds each month for bills. Frankly, we didn’t talk about bills much at all then.
Finally I sat down and asked her what or why she needed the money. She had run up a few very large credit card bills. I was surprised because I had been earning a lot then too. But we both got into a lifestyle and we were expecting more to come. At first I got very mad at her until I realized that I had run up almost the same amount on my credit cards for the investment properties. I was trying to rationalize that it was an investment, but really they were big losses for us. (Later we set up a way to communicate about bills and finances. We still communicate that way years later – and I recommend it. We never knew what the other was doing, and we didn’t discuss savings or expenses. Now we do. You must do this in a relationship!)
We had dug ourselves into a big hole even though I was earning big bucks.
I set out to find a property manager. I did and she found good tenants. I got paid on time.
Meanwhile I got another job offer – with a signing bonus! It was great. I moved to another bank and started working. I got to work from home! Even better. Things started well.
Suddenly they changed their credit underwriting due to the housing changes and economy. Things weren’t so easy anymore. When I moved banks, the other bank refused to provide me with my quarterly bonus. We were expecting that extra money, a lot of it, to come our way. It did not.
Then about a year into the relationship, my property manager stopped sending rental checks. It took me a while but finally after many calls, she responded and apologized. She promised to send out checks for the past due rent (she had been collecting from the tenant) ASAP. She never did and I never heard from her again. I had called, texted, faxed, emailed, and tried to contact her many ways. I got an attorney. To this day I still don’t know why she stopped sending checks and didn’t call back.
I found another property manager and things went better.
But, my employer, the new bank, had been playing big in the sub-prime mortgage arena in a different division. Me and my group had nothing to do with it, but the bank’s other group had made big bets – these bets were now being called and there were big losses.
Underwriting got tougher. This meant less deals approved, this meant less income for me. It was frustrating because I had a great set of referral sources, I worked hard, and I really tried. But the bank was restricting what I could do.
This was an important lesson – that others can limit you if you let them, or let you feel limited….because I couldn’t get deals approved I took it personally – but it wasn’t my shortcoming, it was a change in the bank’s policy. I began to feel bad about myself and I became really hard on myself. We now had a poor debt to income ratio, we were personally leveraged and maxed out on credit cards, and I had to work hard to just keep our heads above water. I was hard on myself because income and sales were falling – but it wasn’t my fault -the bank was pulling back.
I started asking poor questions and started talking to myself in a way that was not helpful or productive. I often would ask things like, “What else can go wrong?” and “Can things get worse?” I actually often said them jokingly – but I said them often and found myself pondering the questions. I believe now, looking back, that this repetitious nature of poor and disempowering questions later caused things to get worse. The bad economy and recession wasn’t my fault, but my attitude, position and situation was my fault. I made poor choices then too.
……then the big events started to happen in 2008 – Lehman Brothers failed, AIG was in trouble, and the whole Bailout discussions started……and guess what, things did get worse for me…….
(to be continued)