You’re Ready to Invest in Real Estate Now
The past few months have reminded me that you don’t need special credentials or a family history in real estate investing (REI) to be successful. What you need is to be engaged, diligent and your own advocate.
A few weeks ago, I shared that my family was relocating to Florida to address some family concerns and where I would spend my maternity leave.
We didn’t expect it to be easy. We knew there would be challenges, but not as many as we experienced.
So what does this have to do with real estate investing? The challenges of everyday life are not disparate to those you experience in REI.
REI and pursuing FIRE is all about taking calculated risk. The best you can do is arm yourself with information and people to help make the process as smooth as possible. However, knowing everything is not possible. Every property is unique. Different real estate agents, property managers and contractors all have their strengths, weaknesses and quirks. Nothing in life is expected to be perfect, but due diligence and planning are meant to make it as easy and predictable as possible.
Chad and I have moved across the country before. We left New York in 2017 for Colorado. We shipped a car and packed our one-bedroom apartment in a moving truck. We thought we knew what to expect and the appropriate timelines for our move to Florida. However, COVID really threw a monkey wrench in a lot of areas, including the moving industry. I won’t repeat the cliche about what happens when you assume, but we thought we had reasonable expectations for what the process would be like.
However, our variables were also different:
- I was pregnant, which mostly meant my husband Chad was taking care of the packing and I was doing very minimal “advising” as to what should be stored, shipped or packed.
- We had two cars instead of one and Chad planned to drive across the country with his dad to get it to Florida
- We had more than tripled the size of our living space since we moved from New York
- We have a toddler
- We have an 85-pound, highly anxious Boxer, which was the main reason Chad was going to drive across the country. We didn’t think he’d survive a plane ride despite any sedatives
Problem – Car Trouble, Twice
We maintain our cars by going to the scheduled oil changes, etc. However, our cars are either more than 10 years old or close to it. That means things break down despite our best efforts to keep up the maintenance. The alternator of the older car died four days before the car shipping company was scheduled to pick it up. The mechanic we normally take it to was booked until that Monday and we took it to another that could get us in the next day. Everything seemed to be going great until they called us to say the tech accidentally dropped something on the radiator and punctured it. They were going to fix it at no cost to us, of course, but they weren’t sure if the part was in stock. Chad picked up the car just in time for it to be picked up for shipping. Phew…
Then, I noticed that in our newer car, the low tire pressure light was on. I took it to a gas station and found one tire was the problem. It wasn’t filling up and I chalked it up to me being clumsy or dysfunctional because I was too pregnant to properly squat down and fill the tire properly. I told Chad to check it again in a day or two. It turns out the tire had a nail in it (I work in construction and I park in a lot of gravel lots so it wasn’t totally surprising.) It was another scramble to get the tire fixed before the movers came the next day. I’m sure Chad has a few more gray hairs on his head due to both of these incidents.
The best parallel to this situation in real estate investing is dealing with property management or tenant issues. At our properties, we like to replace everything with new during renovations, especially HVAC systems and plumbing pipes, to make sure we minimize future maintenance. However, it doesn’t stop a pipe from bursting if the weather ices over or a faulty washer from causing a fixture to leak. You have to roll with the punches and address things as they arise. Going cheap or trying to take shortcuts with repairs usually just costs more time and money later on so take them seriously and address them as soon as possible.
Problem – Contract Deliverable Fails
The blessing in disguise was that the movers came a day late. There was a coordination issue and it gave Chad an extra day to figure out getting the tire fixed. However, it marked the beginning of problems with the moving company. The movers took our stuff to a warehouse, but could not tell us when it would be shipped to Florida. The coordinator was mostly unresponsive and it took almost two weeks to get our things. The delivery was five days past the contracted date. When we received them, several of the boxes were soaked (they arrived during Hurricane/Tropical Storm Elsa) and the mattress was damaged along with some other items. Not to mention, some parts of essential baby things we shipped were missing.
It took many phone calls and a lot of paperwork to get the claims process going. We are getting reimbursed. Persistence was key in sorting this mess out.
This situation can be what it’s like to work with some contractors. You get the bids. You review the scopes. You pick a contractor and sign an agreement with the negotiated scope and timeline. Then it’s the day to start work and the contractor shows, but at 10 am instead of 7 am. Or you agreed on demolishing three walls and you come to review the work and find only two walls were done. The contract signed with your construction team is your bond and you have to hold your contractor (and yourself) to it. The details matter and you (or your project manager) need to make sure what is agreed upon gets done. Otherwise, the contract is there for your recourse, steps to make yourself whole, or terminate the agreement.
While contracts sound scary, you deal with them every day. You have an agreement for your cable service and your cell phone; you also have warranties on your appliances and electronics. You even have it for using e-mail services and credit cards. If you aren’t getting what you’re owed, it’s up to you to review the contract and hold the other party to it. This is a critical piece in making an investment property a success and protecting your returns.
Paperwork, Payments, and Forms
A major priority in advance of our move was finding a doctor to continue my pregnancy care and a pediatrician for both my kids.
I found my doctor first as Baby Boy Gross was due about a month after our arrival. I spent a lot of time making sure I had all the paperwork filled out to move my records sent over. Not everything made it, as expected.
Then for my almost three-year-old, Florida requires a couple of forms for children to enter school or daycare. My daughter’s vaccination records and past physical information needed to be on a special form. However, her physical didn’t “count” because it wasn’t performed by a Florida doctor. AND she didn’t qualify for a physical because she doesn’t turn three until after she starts school. In other words, my insurance wouldn’t pay for one. Fortunately, her daycare accepted documentation that her 2.5-year physical was somewhat legitimate. However, the administrators told me if the State came to daycare that she may be sent home until she can actually get her physical. It’s all terribly ridiculous, but I’m glad they are at least a little bit flexible. Her next physical is 10 days after her first 30 days of school.
The REI parallel, like most things, is that there’s a lot of administration and processes to navigate from closing documents to construction permits to local laws that restrict or allow you to do different things with your properties. You need to gather all the info or assemble a team that can make sure you have all the details in place so you can make good decisions, understand what it takes to achieve your goals, and most importantly, execute.
The Parent Bonus
If you are a parent, you are more than prepared to take on real estate investing. Having children provides you with plenty of opportunity to juggle changing priorities, manage multiple players and hold people accountable. Having young kids or teenagers give you practice with difficult people or poor communicators. My newborn can only tell me what he needs by crying and my threenager doesn’t always have the vocabulary to explain what she’s feeling. Being a parent also sharpens your “spidey senses,” which allows you to feel when something isn’t quite right or someone is giving you the runaround. This is helpful when you get an update from your contractor that doesn’t seem to make sense or judging whether a tenant intends to pay you (late).
Real World, Don’t Stop Hassling Me
Think about what experiences you’ve had in the “real world” and how they give you tools to execute a real estate investment. Did you negotiate a great deal on a car purchase? Have you successfully fought a service provider to give you what was promised (or more)?
You’re ready. Arm yourself with information and start making your goals a reality.
What real life experiences have prepared you for real estate investing? Write it in the comments or e-mail [email protected].