According to most of the real estate books I read, the ideal investment property is a newer house or apartment building in need of some cosmetic repairs (new landscaping, paint, carpeting, or general cleaning up). Conversely, it should not require major structural work (new foundation, boiler, or roof). The rents should be low, even though the property is situated in a good or an up-and-coming neighborhood. Lastly, the owner should be eager to unload the property. When the seller is motivated, he or she will be open to negotiating the price and other terms of the sale, such as the amount of the down payment, the closing date, and, if the seller is financing the deal, the interest rate.
In the decades since I walked into my first showing, I’ve probably considered over one thousand properties. Very few qualified as “ideal,” but I did not realize at the time that by following the popular wisdom, I was setting an almost impossible goal for myself.
I decided to purchase a small apartment building – in the range of four to ten apartments – which would provide a better chance for a positive cash flow than, let’s say, a duplex..
As my search began, two opposing emotions dominated my brain: fear and desire. As to fear, I didn’t know what I was doing. I had no idea how to find investment property. I didn’t feel street smart. All of my employment history had been with the government or in the not-for-profit sector, and I had never ventured into the for-profit arena. I felt like a lamb who had to deal with wolves.
My most recent job as an assistant hospital administrator in Pittsburgh had ended with my essentially being fired. The prospect of losing another job and starving to death concerned me.
In general, I was a fearful person.
While I had read several books on the subject of real estate investment, my knowledge was basically theoretical. Now I had to face the real world. I had to force myself to evaluate buildings, tenants, and even real estate agents who cared more about earning a commission than about finding me the best deal.
Virtually all the books I had read advocated using a good real estate agent who could find me fantastic deals and would therefore be worth his/her weight in gold. I did not know even one real estate agent, so I struck out on my own. I really got an education.
Every Sunday I scanned the Chicago Tribune Real Estate section. Almost daily the real estate ads in the newspaper or the MLS read in boldface type: BELOW-MARKET SELLER FINANCING AVAILABLE! Even so, very little incentive existed to push people toward real estate investment. Investors were content to put their cash into money market funds, which were paying over 18%.
All this added to my general anxiety about my new venture. Counteracting the fear, however, was desire. After my lousy experience in hospital administration, my mantra became, “I will never depend upon a job for my financial security.” Never again did I want to subject myself to the insecurity of a job. Never again would I allow myself to be in that position. I wanted to control my own destiny.
I had grown up poor and didn’t want to live that way.
My desire proved to be stronger than my fear, and so the journey began and the search was on.
I was on my may to becoming a Apartment Investor Mini-Mogul.
There is more to this story…..