That was an idea my husband threw at me as we were getting ready for our family New Year’s Eve outing – snow tubing at Big Boulder with our 6-year-old. It’s important to have fun family times when you’re self-employed. The tendency to work around the clock is rampant, but you can’t live that way. At least not with a kiddo! I think that’s why God (or fate if you prefer) sent us Savannah just as we were starting to really ramp up our real estate empire. (See my previous blog post about this: http://thisgingerjustsnapped.weebly.com/blog/how-it-all-began-part-4-a-tiny-little-detour)
A sober house is a place recovering alcoholics and addicts live between residential rehab and going back to their families or their own private living arrangements. They pay rent by the week as they master their recovery. You can charge by the bedroom, and if your rooms are large you can have two in a room! There is apparently a huge need for sober houses in our area. Steve is enticed by the cash flow potential.
I think it would be too much work. Regular tenants are bad enough – I can imagine how awesome it would be to chase an addict who fell off the wagon to try to get rent! The only way I would do it would be to master lease the property to an organization. The organization is our tenant. They pay the rent every month. They manage the residents. Turnover and wagon-tumblers are their problem, not mine. And they make sure they’re in compliance with local ordinances regarding sober houses.
Actually, that wouldn’t be a bad deal at all. I know an investor who did that – bought a double block in Wilkes-Barre, paid our company to renovate it, and leased both units to a youth group home. 18 months later the organization is still renting from him, they pay on time every month and there have been no problems. It’s something we will surely look into this new year!
New Year’s Resolutions for a Rental Real Estate Investor
I’m not convinced I want to turn that apartment building into a sober house, but I like Steve’s out-of-box thinking. It’s a Brave New Year, 2017. Staring at a clean, white calendar, I get the feeling that anything is possible. This is why New Year’s is my favorite holiday!
Before I list my resolutions, let me add this disclaimer. These are my reslolutions, and my opinion is not representative of all real estate investors. I’m making these resolutions based on my personal situation as an investor: I am a working mom of a 6-year-old running a small business with my husband. We don’t come from money, and we didn’t have high paying jobs before we started this venture, so it’s very hand-to-mouth. We are financing our modest-but-comfortable lifestyle with the income from the business. There is a lot of debt, as is the case with most start-ups. Although we have a good 8+ years experience in the field, I wouldn’t call us experts. We wing it a lot. Especially with the nuts and bolts stuff of actually running a business. I’m still trying to master small business accounting – it’s not easy, but at least we’ve improved our system from the days when I’d go through my husband’s pockets looking for crumpled receipts!
If your situation is similar to mine, feel free to cut and paste my resolutions and use them as your own. If you’re coming from a different place, please use this blog to get started thinking about what you need to do to improve your life, business and cash flow in 2017. One thing I’ve learned is that real estate investors come from all walks of life.
Resolution #1: Subscribe to the Wall Street Journal on my smartphone. This is building on all the work I’ve done on my mindset and my “money consciousness” in 2016. I’ve noticed I waste A LOT of time checking Facebook on my phone. When I’m bored with Facebook, I read the fluffy news stories in Flipboard. What if I spent that time learning about markets and investing instead? My Starbucks has the actual Wall Street Journal newspaper. I grabbed a copy to read the other day while I was eating my breakfast sandwich – there was an article on the front page about how the big banks are not only loosening restrictions but wooing finance companies that lend to house flippers. I spent $3 and bought the paper so Steve could read the article. Looking at it at home I saw another article about how President-elect Trump is thinking of radically changing the tax code, eliminating the deduction of property taxes and mortgage interest! Interesting choice for a real estate mogul to make, but he’s already made his money I guess. He also wants to eliminate depreciation, instead allowing an investor to write off the purchase of a property as a straight business expense. If these, and other rules of the game get changed, Steve and I are going to have to change our strategy in order to survive and thrive. We have to zig when they zag. Information is power, so in 2017 I will be a Journal subscriber! CNN sends me breaking news alerts on my phone. I understand WSJ will do the same if I subscribe to their digital package. And they’re having a 50% off New Year’s sale.
Resolution #2: get my accountant and a business lawyer in the same room with us and properly structure our business entity. We did what the gurus told us and put our rental properties into separate LLCs. But then we built all these other business ventures around them – a management company, a maintenance company, a company that buys and flips houses, a company that holds rent-to-own properties, a company that wholesales to other investors. I would prefer to own one business, but I know for liability reasons these all have to be isolated and separated. I need these professionals to lay it out to me – how can I have my brand while maintaining maximum tax and liability protection? Don’t tell me it can’t be done – the big guys do it all the time!
Resolution #3: Commit to periods of “Deep Work.” I define this as a minimum of two hours focused on a complex task with no distractions allowed. Turn off the phone ringer. Turn off the Facebook notifications. Turn off CNN. Put on the ambient music and just focus on the task at hand. Bookkeeping, bill paying, strategizing, researching sober houses, redesigning the kitchen of our next flip. Periods of deep work are how self-employed people get done in four hours what it takes an average person eight hours to do at a 9 to 5 job. It’s also the only way I’m going to reach my lofty goals, as I am a Mom and I keep a part-time “b” job, and I simply have to get done in four hours what it takes everybody else eight to do! Getting deep work into my schedule is an exercise in extreme time management – I have to get two or more hours to string together (four is preferable) with zero distractions. That means I have to do it while Savannah is in school. Keep in mind I have to do just about everything related to the business while Savannah is in school, and most of my self-care and “b” job-related tasks have to happen during those precious hours as well. This week I only have one day, Wednesday, that I can dedicate to deep work. The following week I have three days. The week after that I have two. That’s how well I have to know my schedule, in order for this resolution to happen.
I think I’ll stop at three resolutions. I have so many more I could make, but I have to be careful not to overwhelm myself. These should keep me busy at least through the first quarter of the year.
This beautiful, clean-slated New Year. As yet unspoiled. Anything is possible! It’s got that New Year smell, and I love it!