Actively pursuing passive Investing
The habit of being a forever learner…
Someone who has given me a lot of great advice recently said to me,
“It is amazing how things that are so simple in theory are difficult in execution before they become a habit.”
At the beginning of my investment career, I was not in the habit of being passive in my investments. So, in the winter of 2006, I packed up a U-Haul in Queens, NY and made the trip to Augusta, GA to begin my ‘passive’ investment career in earnest. Hands On. I believed I had found the formula for success: Buy right, stand around the job site pretending to know what I am doing, make a bunch of mistakes, and still make money.
It was a formula I would follow for several years before slowly realizing the product of my success was not my ingenious innovation but a market that made it hard to lose. Augusta, GA in 2006 certainly was a hard market to lose in, but I did my best to challenge the market’s offering of consistently favorable outcomes.
I settled into renting a loft apartment on Broad Street in downtown Augusta for $450/month above Jimmy Williams sign company. While the rent was low, the building was the definition of deferred maintenance which I would soon discover in a utility bill from Georgia Power in excess of my monthly rent.
As I began to scout the Augusta market, all I could see was opportunity. Downtown Augusta had seen better days–with people only coming downtown to drink, eat, and then retreat to the burbs. I still saw potential everywhere I looked.
I was particularly drawn to the downtown historic buildings and a desire to create hip, loft style spaces. However, I knew my experience and capital needed to start smaller, more practical. I joined the local Real Estate Investors Association led by my first mentor, Justin, and began my search for single family investment properties.
Struggling to gain traction, I partnered up with a franchise owner of Homevestors. The Texas We Buy Ugly Houses company were pioneers in wholesaling and my partner bought in and brought me along.
My new partner Jeff and I set out to find homes. The only problem was deal flow in 2006 was tight. Looking online in the Augusta MLS, offline with Jeff’s wholesaling operation, and chatting up other local investors didn’t produce any inventory. Not to be deterred, we expanded the geography of our search, ultimately finding some homes.
We found a brick home in Greenwood, SC that we received “free” from a church on the condition we move it off their property. We found a home in Irmo, SC with a lot of random mirrors in the bedrooms and locks on all of the interior doors. We found a home in Orangeburg, SC off the beaten path in a market with very little life. And finally we found a home in South Augusta, next door to a hoarder.
I bought a used pickup truck and realized I was a long, long way from my music journalism life in New York City.
Our plan was simple, my partner was going to continue to focus on sourcing properties and running his wholesale business. My instructions were to figure out this project management thing, starting by picking up our day labor workers, creating scopes of work, and making material runs. It didn’t take me long to realize whatever material item was most needed was going to be left off the Lowes list every time.
With work in multiple locations, our market agnostic stance would not prove to be a good logistical decision. Utilizing the only project management skill I had of physical presence caused me to criss-cross the state of South Carolina checking on unsupervised job sites.
Workers in Greenwood were meticulously removing the brick off our “free” house we were going to move to a lot we purchased. Workers in Augusta were throwing our neighbor’s trash in a dumpster we provided–at no cost–so we could have a fighting chance of selling our renovated house in the future. The activity felt like progress and investing. What it really was, was an education.
This education, I would pay for in an untold amount of hours looking at houses in different stages of repair and renovation. Seventeen years after knocking bricks off a free house in Greenwood and after renovating over 10,000 homes, I am still learning from seasoned Auben team members like our Director of Project Management, Donald Caster, and our Director of Sales, Cole Thompson. Donald comes from a strong multi-family development background, and Cole has also spent extensive time as a production builder and developer. Learn more about our team members here.
Check back for next week’s installment of How to Start Investing, where I reveal what my triplex in Syracuse recently sold for and discuss why the market matters…a lot.
Some things you need to know to grow, below: