Startup
What inspired you top create your own business at the ripe age of 45?
"Lost my job from a wholesale car auction and felt that I was too old to start another corporate career. I decided to go back to what I know and houses seemed to be the answer."
Did you have any challenges with financing?
"Yes and no. At first it was difficult to find financing, I didn't know where to look. But when I found our local credit union and opened a line of credit, everything became pretty easy. Now I borrow against the rental properties that I own if I need more capital."
Overcome Obstacle #1
"Finding a consistent group of subcontractors or workers was pretty rough. Over the past 5 years or so I have just met more and more people that I can rely on and trust to complete work for me. The problem kind-of took care of itself."
Lesson #1
"Friends are not always as they seem in business. I used to be pretty close with my old partner but now we rarely speak and when we do it is very awkward."
How did you get started in the housing market?
"I decided to ask a friend of mine to partner up and see if we could make money by buying, remodeling and, selling houses." I chose houses because I was sick of cars and realized that no matter what the economy is doing, people will always need a place to live. I wanted to provide that for them.
Have you had any difficulties with the changing housing market?
"Yes, we have a house right now that won't sell because it is too nice for the area that it's in and buyers are afraid of the interest rates. Two years ago, the house would have sold in a week."
Overcome Obstacle #2
"Balancing the choice between flipping and renting homes is a struggle that I face on every house. I would love to rent out every house and increase perpetual income but sometimes that can take too long to pay the bills."
Lesson #2
"Always listen and look for opportunities around you. I have purchased many homes through word of mouth situations."
How did you protect yourself from your partner?
"We sat down with some attorneys and realized that most partnerships usually don't work out in the end. To protect ourselves, we both created our own LLC's that owned half of another LLC that all of the business would go through."
Did you have any problems with your partner?
"Of course, he had other business that he was running and didn't put the same amount of time and effort into our business. After about 3 years I was able to buy him out and take ownership of the company."
Overcome Obstacle #3
"Keeping up with buyer preferences has been challenging for me. Not every buyer likes what I like so I have learned to focus on what the average buyer wants or needs in a home rather than what I want to put in it. Their preferences are always changing too, people used to like white cabinets and now they like off-white."
Lesson #3
"Never stop learning. I have learned many new tricks of the trade simply by watching how other people do things."
Why did you feel that you needed a partner?
"I wanted someone who I could take on the risk with as well as someone who knew the area and people in the area better than I did. He lived his whole life here and knew everyone it seemed."
How did you overcome the struggle of not having a large network in a very word of mouth based environment?
"I just found one house and went from there. Our first house was purchased from an auction company and we used realtors to sell it and have grown the business from there. People see our work and want to see more of it therefore we get more leads on potential houses."
Overcome Obstacle #4
"Learning how to manage money on a larger scale like this was new to me at first but then I realized that it's the same concept as the smaller scale just with bigger numbers."
Lesson #4
"Learn how to buy and sell. Every business is based on buying and selling but the product isn't they only thing you are selling. More often than not, it is yourself that you are selling to customers or bosses."