I couldn’t be more excited by how our latest renovation project turned out. Last winter we did our first mailer to neighborhoods where we have renovated houses in the past. We got two phone calls as a result. One was from the long-term (and out of state) owner of 1198 Forest Ave. He was getting out of the rental business, and this was his last one in Memphis. We went to see it and immediately knew that we would like to buy it. We loved the location (walking distance to Crosstown Concourse), and we loved the fact that there were five bedrooms. His estimate of how much it would cost to renovate the home was too low, which meant that the price he wanted wasn’t going to work for us. We were able to settle on a price we both thought was fair, and a few weeks later we closed.
Here are some photos from when we purchased the home.
The home had a newer roof and HVAC, though the entire system had been stolen a year or so ago. So we had to install a new system. In addition, we decided to add a second system for the upstairs. We knew that we needed to replace everything in the kitchen (flooring, lights, cabinets, countertops & appliances). We would also be painting the interior and exterior, and refinishing the hardwoods upstairs. The other main issue was that while there were five bedrooms, there was only one full bathroom downstairs plus a half bath upstairs. We would need to figure out how to have at least two full bathrooms.
Our solution was to enlarge the half bath to accommodate a full bathroom. To do this we just made one of the bedrooms a bit smaller. I was very happy with the design decision.
The entire project took about four months. Normally we start looking for tenants once the project is complete, but this time we were able to find someone a month before we were finished. Final touches are today, and our new tenants move in tomorrow!
Alternate Title: That Time I Went on Vacation and a Tree Fell on My House!!!
Last week Mandy and I were on a relaxing vacation in Playa del Carmen. On Wednesday morning we were in the pool, and when we came back to our cabana to dry off, I saw that I had several missed calls, and lots of texts. The first text I read was from a tenant. It said, “Please get over as soon as you can. A tree just fell on the house!”
We gathered up our stuff and headed to the room. For the next few hours I was on the phone with tenants, contractors and the insurance company. A limb off the very large tree next door had fallen onto the porch. And when I say “limb”, it’s better to picture a tree, because that’s what it looked like.
The next day the limb was removed, and the day after that the damage was assessed and a plan was made.
But that’s getting way ahead of myself isn’t it. Wednesday was a rough day. Here I was on this amazing vacation, and now I was majorly stressed out. How would I regulate my stress so that I could do what needed to be done plus be able to actually enjoy the last couple of days of my vacation?
Each day since last Wednesday has been better, but I thought I would share some of the things that were helpful to me.
First, this was not the first time as a landlord that I had an emergency. I’ve owned rental properties for over fifteen years, and over that time three things have happened. First, I’ve learned a lot. My knowledge and experience has grown. What this means is that I understood the basics of what needed to be done. Second, I have ample financial reserves. I expect emergencies, and therefore I knew that though I wouldn’t necessarily like writing the checks that were going to be required, it wasn’t going to kill me financially. And finally, I’ve developed good relationships with people who know more than I do. I was able to call on some of those relationships to get things moving while I was gone.
And actually, my being in town when this happened wouldn’t have helped much. Sure, I would have been able to go over there immediately, but it’s not like I was going to break out my battery powered Ryobi Chainsaw and start cutting up the limb!
These three things helped immensely, but the fear and stress continued to creep in throughout the day. I was grateful that no one was hurt. A couple of inches more to the left and it could have been a lot worse, since one of my tenants was in the front bedroom when it happened. Those thoughts really weighed on me.
As the adrenaline wore off after a few hours where I had done all that I could do, the stress began to descend like a cloud over me, and this is where the real work was needed.
I think self talk can be a gift at times, but what I’m about to share is a bit different than just self talk. I had to go back to what I believed about God.
I’m always nervous about losing a reader when I bring up God, but I hope that you see that my faith is fleshed out in the messiness of life. It’s not a bunch of platitudes or rules. It’s about a relationship, and if that relationship does not evidence itself during moments of weakness and challenge, I don’t think it’s much of a relationship.
I thought back to Psalm 62. It’s a Psalm written by David, and anyone who knows anything about David knows that he was a king, and kings know a bit about stress.
The Psalm begins, “My soul finds rest in God. He is my rock and my salvation; he is my fortress, I will never be shaken.” Who knows what he was dealing with at this moment, but he knew that it was actually possible for his soul to be at rest even as he went through a storm. That’s a pretty strong statement, and one that I was grateful to be reminded of.
It’s the ending of this Psalm that I thought about last Wednesday. David ends this Psalm by saying, “One thing God has spoken, two things have I heard: that you, O God are strong, and that you, O Lord are loving.”
This has been one of my favorite verses for a long time. What it says to me is that it’s one thing for God to be big enough to handle my problems and needs. It’s another thing altogether for Him to want to handle them.
Said another way, it’s one thing for God to be strong. When I think of God’s strength and power, I think about the creation and the sustaining of the world. I think about it in a macro way. It’s good to think about God in this way, but it’s not complete. God is the creator and sustainer of the entire world, but he’s also a father, and he loves his children. That takes the big macro view and hones it in to the very personal. God loves not only the whole world. He also loves me. He knows all about me. That’s huge.
As I reminded myself of these truths throughout the day, I began to experience peace. It’s in moments like these that I am so grateful for my relationship with God. I can look back over my life and see countless times when he took care of me. When I reflect back over that time, it makes it easier for me to place my trust in him today.
As I’ve shared in the last two posts, I’ve been on a real estate journey for the last 17 years or so. This last post will be about the last five years.
From 2016 through the middle of 2019, Rob and I bought, renovated, and sold several homes together. In that time I learned so much about identifying good deals, making budgets, negotiating contracts, securing financing, hiring good subs, making design decisions, and navigating a project to completion. The majority of of the homes we bought during those years were in my neighborhood. It was a privilege to be able to restore these beautiful 100 year old homes, and it was great to be able to play a role in selecting my new neighbors!
If you’d like to see some of the work that we’ve done, feel free to check out our website.
In the spring of 2019 I heard a term that would completely change our strategy. The term is BRRRR, and it stands for Buy, Rehab, Rent, Refinance, Repeat. Prior to this we were buying houses, fixing them up, and then selling them. And then paying a lot of taxes. Soon after hearing about the BRRRR strategy we had the opportunity to buy two houses next to each other in an area that we believed would appreciate over the next 5-10 years. So instead of buying, rehabbing and selling, we ended up renovating them, getting them rented and then refinancing them, getting all of our money back in the process.
Now when we start a project, we treat it as if we were going to sell it, but then at the end of the renovation, we run numbers to see if it could work as a long-term rental. The great thing about flipping houses is that at the end of the process, we get a nice check. But then we’re done. We’re not really building wealth. Long-term rentals help us to build wealth.
I retired from vocational ministry at the end of 2018, and since that time I’ve been able to give more time to my business. In that time I’ve grown my personal rental portfolio from seven properties to fifteen.
I mentioned Thatch Nguyen in a previous post. In that post I shared about a statement he had made that has made a big impact on me. A few weeks after this I heard him say something else that has made another big impact on me. He said that there are two phases of real estate investment. There’s the Accumulation phase, in which you, yes, accumulate properties, and then there is the Payoff phase, in which you (again, confusing I know) pay off your properties. The idea is that at some point you want free and clear properties that generate monthly cash flow.
After hearing this I decided to play around with some numbers. I wondered when we could have everything paid off, and what it would look like for us financially when it was paid off. Having learned about the debt snowball over twenty years ago from Dave Ramsey, I found this online debt snowball calculator and I began to input all of my numbers.
With the debt snowball, you take your loans and order them from smallest to largest. Then you take a certain amount of extra money and apply it to the smallest loan so that you can pay it off early. Once that one is paid off, you take everything you were paying there and apply it to the next smallest. And so on and so on.
I wondered how much extra it would take to pay everything off in 10 years. I plugged in certain numbers, and finally discovered that an additional $400 applied towards my smallest loan would do the trick. I was pretty blown away by that. One of the main reasons this worked is that I had just refinanced my two loans with longer terms (25yr and 30yr) to 15 years.
So now I have a vision of what life could look like for us a decade from now. There are of course lots of things that could cause us to course correct. Another 2008 could happen. One of us could get sick. But as of today I’m glad that we have a plan, and I feel really good about it.
If you have questions or want to chat, hit me up. I love talking real estate, and I’d be happy to help you if I can.
Part 1 of this series chronicled the beginning of my real estate journey. It was marked by excitement and naiveté, and as you’ll see in this post, it just about did me in. As I mentioned at the end of that post, my business partner ended up moving out of state, and I was left with an unfinished house and an inherited crew that wasn’t doing what needed to be done. And to top it off, I really didn’t know what in the heck I was doing. To say I was scared was a major understatement.
When I first started writing this post I quickly moved on to the good portion of this time period. I mentioned in the last post about being an Enneagram 7. One of the things you should know about Enneagram 7’s is that we have a need to avoid pain. I recognize that I was doing just that as I wrote the first draft of this post. The truth is that this was one of the most painful couple of years of my life. I was in the deep end of the pool, and I didn’t know how to swim.
So as an exercise in growth, let me back up and share more of this story.
My business partner and I had purchased this home on Evelyn Ave in Cooper-Young the summer of 2009. We had big plans for it, but it just dragged on and on, and as I mentioned earlier, when the economy got really bad he was over-leveraged and ended up moving. We had borrowed the money from my parents, and all of it was gone. I ended up going back to them to borrow more, and I set out to finish the house. By the time it was finished it was the summer of 2011. The good news was that the business partner was fully out of the picture and I owned the house 100%. The bad news was that I couldn’t sell it. By this point I had my real estate license (more on that back story in a bit), and so I put it on the market for $133k. It sat for 6 months. I took it off the market, then a few months later put it back on for $118k. Another 6 months came and went without so much as an offer. What was I going to do now?
The worst part of all of this is that I had made promises to Mandy that I now couldn’t deliver on. Selling this house was going to mean that she could stay home with our kids. I kept thinking I could turn things around, but it just got worse and worse. She had never felt good about the partnership I was in, but I didn’t listen. She ended up having to go back to work for a year, unfortunately at a really tough school. It was one of the hardest seasons for our marriage.
I ended up getting the house rented, and from the very beginning it cash flowed quite well. I can look back on it now and see that holding on to it was one of the best decisions I made, as it’s now worth close to $200k. Even after the house was finished and I had it rented, there were some long-term effects. I remember that every time I drove past Home Depot, I felt a little sick. It also took time, counseling, and a lot of work for Mandy and I get to a good place.
The word “work” is a good word to use here. I worked hard. Not always smart, but definitely hard. I learned a lot during this time. More than anything, my faith grew because I was forced to depend on God to help me. As hard as it was, I can look back on it and say that I grew, and that I am better as a result.
Now lest you think that this entire period of time was terrible, let me share some happy things! One day in early 2010 my friend Josh introduced me to his friend Rob. Josh knew that both of us had an interest in real estate, and he thought we should meet. I’m sure glad we did. Soon afterwards I started working for Rob. He was trying to buy foreclosures, and I was getting good at researching and finding deals. One lovely spring day he asked me if I had considered getting my real estate license. I told him I hadn’t given it much thought. So I started thinking about it, and by the end of the summer I had gone to class and passed my exam.
During those first few years being an agent I wrote so many offers for Rob that I got pretty good at it. During all of this time I was also the pastor of a young church, so there was a limited amount of time I had for my new business. Slowly but surely, though, I began building my list of clients.
At the end of 2013 Mandy and I made one of the best financial decisions we’ve ever made. We bought a new house. But more than that, we decided to keep our first house as a rental. I always tell people interested in getting started with real estate investing that the best way to do it is to turn your current home into a rental. This was a game changer for us.
So going into 2016 I now had five rentals and a growing business. I had gotten through the global recession, and things were looking up. One day in early 2016 I started researching a house on my block that had been vacant for awhile. I figured out who owned it and found an email address. I emailed him and asked if he’d be interested in selling it. The next day he emailed back and said he would. I was kind of surprised. So I talked with Rob, and we decided to buy it together. This would be the first of twenty projects we would do together.
The final post in this series will be how things have grown and changed in these last few years.
Real estate has played a big role in my life over the past 17 years. I thought I would share some of the story that got me to where I am today.
In 2004 Mandy and I lived in the San Francisco Bay Area. I had graduated from seminary the year before, and we had moved just outside Oakland so that we could be closer to the school where Mandy taught. We had been told by several people that if we were going to put down roots here, we needed to buy a house. So we began looking. Our good friends Ryan and Marian were told the same thing, and being that we were looking for intentional ways to practice community together, we decided that we should buy something together.
After looking at several properties together, one Sunday afternoon we went to the island of Alameda for an open house at a duplex. That thing was so tiny, but we decided to put on our big boy britches and make an offer. If I remember correctly, our offer was around $30k over list, and the sellers still countered us another $30k. We walked away sadly. Side note: that place wouldn’t have worked for very long, as we soon had two kids and they had four!
After that Mandy and I felt that perhaps the timing wasn’t right to buy. But now we had to decide what to do with the rather large amount of money that we had set aside as a down payment. I decided to talk to my friend Dax about it. He now had three rental properties in our hometown, and after talking for awhile he asked if I’d like to buy 50% of those properties and go in as partners. After a week or so of thinking about it, we said yes.
At that point I felt like it could be a good thing to continue to rent in the bay area but to own real estate in Tennessee. Here’s what the numbers looked like. We were renting a 2BR/1BA home just outside of Oakland for $1450/month that would have cost us over $400,000 were we to buy it. In my hometown, we were getting around $850/month for homes that cost $100,000. Big difference.
Things changed for us less than two years later when we decided to move to Memphis. Adam had been born six months earlier, and we decided it was time to come closer to home. We wanted to be closer to family, and we wanted to start a church.
During those next few years I learned more and more about real estate. I wanted to own more properties but I wasn’t sure how to go about getting started. One day in 2008 I met with a local investor named Joe over coffee to learn more. He and I were both board members of our neighborhood association. He had been flipping quite a few properties in our neighborhood. I told him that I had seen some white stickers on a house on my street, and he said we should go check it out. We got there, he looked at the sticker, and then he took out his phone and dialed a number. Next thing I knew we were buying the property together. I had no idea what I was doing, but I’m an Enneagram Seven so it was no problem! One week later he said that he was going to need to get another investor involved, and he asked if he could buy me out. I asked how much and he said $7000. I said YES!
You can probably imagine that at that point I was pretty much hooked. Over the next year he and I bought two properties together. The problem was that now it was 2009, and things with the economy were about to get rough. Joe ended up moving before we finished the last one, and I was stuck figuring out how to get out of the mess I was in. It was one of most difficult times of my life, but I grew a ton. Fast forward a decade and that house is one of my best rentals.
That’s all for this phase of my journey. Next week I’ll share part 2, which deals with the years 2010-2016. Spoiler alert: it was quite the bumpy road.
A few years ago I read The 12 Week Year, by Brian Moran and Michael Lennington. At the time, I picked up some good tips, but I didn’t take it farther than that. Towards the end of 2020 I heard Brian Moran interviewed on a podcast, and I decided to pick the book back up. Better still, I decided to put the system into practice.
If you’re not familiar with this book, the idea is that while having annual goals is better than having no goals at all, there are some real drawbacks with annual goals. We all know the feeling of setting annual goals in January, yet not feeling any real urgency since we have so far until the end of the year. It’s why in the fourth quarter we actually get a lot of stuff done. The 12 Week Year isn’t simply quarterly goals. It’s treating those 12 weeks as a year, with goals, strategies, and celebrations. As the authors say, “Twelve weeks is long enough to get things done, and yet is short enough to create and maintain a sense of urgency.”
This made a lot of sense to me, so I decided to give it a try. I set a few goals, some dealing with work and some with self-care. The two self-care goals were to read ten books and to do 48 sessions of cardio. I’m happy to report that I exceeded both of these goals. I track my reading with Goodreads, and last night I finished my fifteenth book. I set up a spreadsheet to record my cardio, and yesterday I recorded my 53rd session. The majority of these sessions was spent on a treadmill, though lately it’s been more bike riding or outdoor walks/hikes.
My other set of goals dealt with my work. I came into 2021 with several construction projects that had just begun. The first goal was to have 1176 Sledge Ave finished and on the market. I’m going to miss that goal by a week or two, but it’s mainly because we ended up doing more to the house than we first thought, which simply means a longer renovation period. The second goal was to be finished with our new construction project at 909 N. Avalon St. I underestimated this badly. We’re probably six weeks away from that being finished. This meant that my third goal, beginning construction on our second build, also did not happen. New construction is a brand new thing for us, so those were both overly optimistic goals. No harm, no foul. The last goal was to have 1195 Dorothy Pl under contract. That happened. I also bought and then sold another house during this time, and listed and got under contract a project we did a year ago, so all in all I’m happy with where I landed at the end of the 12 Week Year.
The last goal I had falls somewhere between self-care and work. It’s blogging. I set a goal of one post per week. This is my tenth post, so I fell short just a bit. Writing is something that I want to get back in the habit of doing, and while I have enjoyed blogging these last few months, I am definitely still trying to find my rhythm.
Now for some reflections…
With both of the self-care goals, the key was setting the goal, but then also having an easy way to track it. I’m going to continue tracking my cardio activity, but with the weather as awesome as it is, I will most likely set a little higher goal for this next 12 Week Year. And with reading, I’m inspired to set an overall 2021 goal of averaging a book per week. I’ve never done that, but I think it’s very possible. Goodreads has been a huge help with this.
I think the reading goal and the blogging goal can actually shape one another. It’s one thing to read a lot of great books. It’s another thing to take the time capture key ideas and reflections. I’m not always as good at that, but it’s something I want to get better at. For this next 12 Week Year I’m going to write some blog posts on key takeaways from some of these books.
The new construction part of my business is way more passive than the renovation part. The reason is that we hire a builder to do everything. It’s actually pretty fantastic. My goal for this first 12 Week Year should have been to implement systems for the builds moving forward. That is a goal that I was able to accomplish. We spent time getting set up with the vendors that our builder uses. We selected products for this build that we will no doubt use for future builds. This will allow the next projects to be even more passive than the first one.
I did not set any goals with my client business because I wasn’t sure what goals to set. That was a mistake. The goal I will set for this next 12 Week Year will have to do with the number of touch points I make each week with clients and friends. I’m really looking forward to making and accomplishing this goal.
Finally, with a new 12 Week Year right around the corner, I’m able to start afresh without waiting until the end of 2021. That’s genius. I get to celebrate my successes and reevaluate my misses.
When the middle of March rolled around, I remember thinking, “I’m sure glad that I had a better than normal winter, because the rest of 2020 is going to be rough for real estate.”
At the time, none of us could have predicted how great the real estate market would turn out to be for 2020. According to Memphis Area Association of Realtors (MAAR), the average sales price in November 2020 was up almost 11 % from the year before.
There are several reasons for this.
First, record low interest rates. If you purchased or refinanced your home this year, you know what I’m talking about. And rates have continued to get better…they hit another record low this week!
Second, folks wanted more space. For the past ten months, our homes have become not simply homes but also offices and schools. We’ve been together A LOT, and we’ve found that we could use a little more space. This is why many have fled their expensive cities and small apartments. I’m looking at you San Francisco and NYC.
Finally, there’s a supply and demand issue. Inventory is down, which has led to lots of multiple offer situations and homes going over list price. It continues to be a seller’s market, which means that prices are going up.
How has all of this impacted me personally? I mentioned at the beginning of this post about my fears that this was going to be a rough year for real estate. Surprise, surprise, though…it ended up being my best year ever as an agent, with just under $4.5 million in sales. Who knew?
So what is ahead for 2021? I continue to be bullish on real estate, especially in Memphis. Compared to other cities, Memphis is still one of the most affordable places to live. I will continue to help clients buy and sell real estate, and I plan to be a buyer as well.
In 2020 we purchased six properties, but for the first time in awhile we didn’t sell any of them. We decided to keep them all as long-term rentals. We hope to buy a few more in 2021, but this year we plan on selling at least one. We’ve just begun a renovation project in my neighborhood (Annesdale-Snowden). It’s a 4BR/2.5BA home (w/ separate office and bonus room) built in 1900. It’s going to be a fun project, and it will make a great home for whoever buys it. 2021 will also mark our entrance into new construction. For the past few years we’ve been buying vacant lots in midtown, and we just broke ground on our first build in Vollintine-Evergreen.
I’m grateful for those who have given me the opportunity to help them buy or sell a home. If you are in the market to do the same, I’d love to help you! Feel free to check out my Zillow site to read more about me as well as reviews from my clients.
In January I came across a couple of posts by Mr. Money Mustache (here and here) about buildings that he had constructed. As I read these articles, I found myself starting to desire to build a home office for myself.
There were a couple of initial reasons. First, now that I am doing real estate full-time and don’t have any plans to stop, I know that I’m going to be working from home for the foreseeable future. This has been working for me for some time, though it gets a bit tricky in the summer when everyone is home. Second, I have a little more time on my hands than in the past, and I thought it would be fun to take on a physical project. I have learned over the years that I am not a “measure twice, cut once” kind of guy. That’s just not in my DNA. So I stick with the things that I’m good at, but at the same time, I have a desire to grow in this area.
After reading quite a bit over a couple of days, I pitched the idea to Mandy. I wasn’t sure what she would say. She loved my two reasons but added a third. Adam is about to be in high school, and he and Micah have always shared a bedroom, and she thought it might be nice for them to have their own rooms. She suggested that I build something for me, and then Adam take the bedroom that is my current office.
And there it was. We were on the same page way quicker than I thought we would be. As I researched, I quickly came to the conclusion that it would not be a wise move for me to try to build something from scratch. Again, the “measure twice, cut once” is really important for that kind of work. So I went to Probuilt of Memphis to look for a shed. I decided that my best bet would be to hire someone to build a 20×12 shed, and then I would finish the interior.
First we had to demo the existing shed. Then we had to make sure water wouldn’t build up under the new shed. We also had to get new fencing since the existing building’s had served as the fence.
On Monday, March 18 two guys from Probuilt Memphis showed up to build my shed. The only thing they had built in advance were the roof trusses. By 3:00 on Tuesday the shed was completed. I was blown away at how good these guys were. We had them build a wall to divide the building into two parts. I still needed a place for the mower and other tools, so six of the twenty feet is shed. The ceiling is lower on this part, which allowed for a loft in the office portion for storage. So glad we did that. And they built shelves in the shed portion.
The next day the electrical rough-in took place, and the day after that, we had closed cell spray foam insulation installed. Then the drywall went up.
On Saturday the entire family painted the exterior. Once the drywall was finished, I painted the interior. Then I laid this vinyl plank flooring from Home Depot, and finally I had a carpenter install the heat and air unit and install the trim and baseboard.
As one who is involved in a lot of construction projects, I’m so pleased with how the project turned out and how quickly it happened. I love my office. Here are a few photos of the finished project.
Ok, so it’s not a new house, but we just did a major makeover of the exterior. I’ve always loved the brickwork on our house, and I knew that I would never paint it. The trim, though…that has needed some love for awhile.
As you can see, the windows needed to be scraped, the door and iron railing had that weathered look that years in the sun give, and overall the house just looked a little tired.
Our friend Lonnie sanded and stained the door, and then Caldwell Painting came and did the rest. We were thrilled with the end results!
Colors used: Trim – Peppercorn (SW 7674) Foundation – Acier (SW 9170) Porch Ceiling – Ewing Blue (CW-585)
Over the last couple of years, as my schedule has had more consistent openings in it and I’ve begun to learn how to adjust to fewer things on my plate, I’ve begun to learn about the hidden value of time. I’ve learned that when I create space in my day, I begin to create space in my mind. And when space is created in my mind, I miss fewer opportunities. I think back over the past five years on those houses I missed out on buying because I was too busy to jump on them. Too busy doing good things, but too busy nonetheless.
Over the past couple of days I’ve been working on refinancing two of my rental properties. These are the kinds of things that often get overlooked because they take a lot of time. But because I had some margin I was able to work on them. Here’s the result. These two refinances are going to save me over $100,000 in interest. I go from 25 and 30 years to both being paid off in 15. Hence the $100k interest savings. That’s a big deal.
What are you missing out on because your schedule is too crammed?
