It’s 11:00 am. Lying in the front seat of the car, men are shooting at each other in the middle of the street. This is not the beginning of the movie. This is not a catchy start to the article. This is my real life. This is what awakened me.
In 2009, I started working with an investor who was buying real estate at a county auction. It was a time when few people were willing to buy anything, not to mention homes. The competition was limited. We were literally buying a house for $ 1 for 10 cents. If you prefer, you can buy a home for less than $ 10,000 daily. Some were jewels and some were trash. It was a thrilling experience. We went out before the auction, walked outside these properties, guessed the condition of the properties and bought them.
In the end, I ended up buying a lot of properties scattered around the South Side of Chicago. The city of Chicago is 234 square miles. The south side is larger than both the north side and the west side. Therefore, the South Side is at least 117 square miles. Looking at it, Manhattan is 22 square miles. The South Side is made up of dozens of different regions and we bought them all. I bought the property for $ 10,000, rehabilitated it and rented it, so I didn’t care. It didn’t matter to us because the numbers on the paper looked incredible. (What a mistake it was.) We didn’t have time to learn about different regions. All we did was look at the numbers.
Follow the numbers
So, for the next year and a half, we bought and rehabilitated dozens of properties in different regions. In certain areas, there were some issues along the way. There were some intrusions in the property. “But look at the numbers on the paper,” he justified it. So I hired an answering machine.
An answering machine is a place where you pay people to live in a house while you are rehabilitating to see the house. Perhaps this was a red flag, but I thought, “Look at these numbers.” I tried to recruit a contractor who refused to work for some of the neighborhoods. But another voice hindered our actions. You need to find someone else to work on it. I heard that the contractor called me and heard the shooting outside. We said, “Then it’s better to stay inside. I’m going to make some money with that property.” We had the contractor rob the property from the property to the truck. “It was only part of the business. Don’t worry. Have you seen these numbers? I’ll be rich!” I kept thinking.
So now I was there and praying to God to get out of it. I don’t know how long I was hiding there. I don’t even remember going home. The first clear idea I remember was, “I’m doing all this for the poor $ 300 a month.”
After that happened, it was a complete change in my view. There were many safe areas in Chicago on the South Side. We already owned real estate in some of those areas. Looking at those properties, “Why buy in a bad neighborhood? Is it worth risking my life to make a little money?”
We immediately started trying to unload a property in a bad neighborhood, and what do you guess? There were no buyers. I even showed them my proforma and income statement. I said, “Look at these numbers, it’s a gold mine.” No taker!
We lowered the price from profit to break-even point. There is nothing yet. There is no taker. We lost it. there is nothing. We went down to even greater losses and finally the buyers lined up in the last few months. It was another investor. He was buying real estate in the neighborhood for the returns he was able to get. I told him good luck and never looked back.
We lost a lot of money on those assets, and to be honest, I was willing to lose more to get rid of them. Without taking these risks, I realized that real estate has great opportunities. I continue to buy properties on the South Side. There are many great areas that are safe and bring great benefits. It’s not as expensive as in other areas, but it’s safe to be there. Whenever I get tired of hearing new investors talk that the main way to determine if real estate is a good buy depends on what the Excel spreadsheet spits out.
In fact, you can make more money in real estate than you can imagine, but it’s more complicated than just the numbers on the page. It requires a lot of hard work and four Ps: passion, permanence, patience, and process.
Investor: Have you ever bought a property that you regret immediately?
Tell your story in the comments section below!