My interest in real estate began in my early 20’s after moving to Nashville, TN. There was something about paying the landlord every month that caught my attention. Simple math told me that he was banking some decent cash for the berber and beige two bedroom house that I rented from him. I started reading real estate investment books from the library, and quickly exhausted their supply. What was it that captured my attention?
Real estate requires activity. It involves risk. It is speculative. Creativity is rewarded. Problem-solving equals profit. It is a fluid market. I can buy. I can sell. I can add value. I am my own boss. I make my own decisions. It is an ongoing education. It is an adventure.
My first deal was in 2003, when my new bride and I purchased a 1920 brick house in an emerging historic neighborhood in East Nashville. It was a bank-owned foreclosure that we were able to negotiate into our price range. We purchased the house to be our home, but had resale in mind from the start. We performed a cosmetic renovation , and took advantage of the biggest tax loophole of the IRS by selling it two years later, tax-free. We moved two blocks away, and did it again.
With one toddler and a baby on the way, we no longer wanted to move every two years. And we could do without the ever-appearing layer of drywall dust as well. The time had come to invest outside of the home. We had built our cash reserves and we were ready to take action.
Our first property purchased for the sole purpose of investment was a 624 square foot rental sold at an absolute auction. I loved the rush of the bidding war, and still do anytime I attend an auction. The renter moved out a few months later. I was thinking of making a few repairs and finding a new tenant, but elected to fully renovate it and sell it instead. Just days after putting it on the market, the house received multiple offers and the taste of victory was sweet.
I proceeded to do three more fix-and-flips in East Nashville during “The Great Recession”, and then took on the largest challenge to date, converting a duplex into a half-million dollar single family home in Oak Hill. From purchase to sale, that project took nearly a year, but it paid off.
At some point during the East Nashville flips, I shifted into real estate being my primary job and income source. It was a goal that I was glad to achieve, and soon added three single family rentals, boosting passive income. I began to search for more deals where my knowledge of the market was getting rewarded, rather than my knowledge of renovating.
Near the beginning of 2013 is when the Nashville real estate market turned upward. Values climbed in a hurry, and solid investment deals faced extreme competition. Investment money started pouring into the city from all across the country. As demand soared, I recognized the opportunity to find undervalued properties off of the MLS, and bring them to market for other investors to flip. I also developed better skills to find hidden value in properties, doing multiple deals where I re-subdivided a property to create a new building lot.
There is no shortage of real estate advice available, and I certainly do not claim to know it all. One can probably find an “expert” out there who will tell them what they want to hear, like, “how to make millions with no money down!” But the truth is, there aren’t really any “shortcuts” in real estate. The investors who are successful for the long haul may not be flashy, but they build wealth and passive income.
As of this writing, at the close of 2014, I have bought or sold over 30 houses and own five long-term rentals. My journey in real estate has been successful with a very conservative and thoughtful approach. I continue to refine my craft and adapt with the market to maximize profitability. Frankly, I can’t imagine having any other career, and I love talking about real estate. Thank you for your time, and I hope you enjoy the discussion.