(This blog post was originally posted a while back but continues to be brought up by readers so we’re sharing it again…)
Everything single person we’ve met that has had any type of success with Real Estate Investing has had to face “the test”.
It’s almost as if the world is out to verify that you’ve got what it takes to succeed by throwing you a hard curve ball.
What the heck are we talking about?
Over the past couple of days we’ve been out here in Calgary at Greg Habstritt’s Simple Wealth conference. It’s one of the highest level real estate conferences you’ve ever seen.
No “hype”, no “quick fixes” … just the honest truth about real estate and what it takes to make money in this business.
And there’s a common theme flowing through every successful investor’s story…
Here it is:
There was at least – AT LEAST – one point in their investing lives that they were so seriously tested that they almost quit the business.
They questioned what they were doing. They questioned they value of what they were getting in return for their efforts.
Their family questioned what they were doing. Their spouse questioned what they were doing. Their friends questioned what they were doing.
They questioned their ability. They questioned their skill. They questioned everything.
They were experiencing “the test”.
Don Campbell described how the windows were stolen out of one of his multi-unit buildings (the windows of all things!) .
Greg Habstritt described how early in his career he was on his hands and knees scrubbing the floor in rental property after a sewage backup.
Two other investors described how they paid a contractor 80% of his fees right upfront and only saw him again when they were face to face in court.
This is not an easy business. “Simple, but not easy” is a phrase thrown around a lot.
And there’s a very high probability that if you get into real estate investing in a serious way you’ll have more than one of these “tests”.
But if you have the guts, the drive, the work ethic to stick things out magical things begin to happen.
Let me share a story of our own to illustrate. We’ve shared this story a few times with some investors but we’ve never revealed how close we came to quitting everything because of it.
We were attempting to fill a single family home with a tenant/buyer using a lease/option strategy.
We were working with another investor on this deal and because of various financial considerations (he needed the money) we were under intense pressure to fill this home quickly and for top dollar.
This investor we were working with needed to get some money back from the investment quickly or he was going to be some financial trouble (long story).
And because we had some experience behind us at this point we bit off more than we could chew and promised that we could raise $10,000 in upfront money from a tenant in 7 days.
Before we continue there’s two HUGE lessons right here.
Number One: Never get yourself in a position where you NEED a return on your cash in a short period of time. It makes you desperate and as we’ve shared before money has a way from running from desperation.
Number Two: Never “over promise”. Always under promise and over deliver. I learned that in my software development days and it holds true in any business.
Back to the story…
For anyone familiar with lease/options you may know that to get $10,000 plus first and last month’s rent on a vacant home within one week of closing is a monster task.
It just doesn’t make sense to guarantee that to anyone.
But we did.
So we began to advertise the home and get appointments lined up.
On the first day out at the property we had about 4 people show up. This was on Sunday, two days after closing.
We had a decent turn out but there wasn’t anyone who was a right fit for the property.
And then the fun really started. It was the middle of winter and it snowed hard for the next day so we didn’t make any appointments to show the home. We kept thinking the snow would stop and we would be able to get out to the property shortly afterwards.
By the time Wednesday rolled around we realized that the snow might never stop. Ever!
So we began hitting the phones and asked anyone who would listen to meet us at the property that night in the middle of the storm. They thought we were crazy but we were running out of time – we needed to collect some cash.
Somehow four very brave souls ended up meeting us at the home. And because of the snow I left my car at home and drove my wife’s SUV out to the property.
The snow was so bad that everyone who arrived just stopped their car in the middle of the street in fear that they would be stuck if they pulled off to the side.
It felt as if there was literally no one else out on the roads but us, those four possible tenants and the snow plows.
So I jumped out of the car and greeted everyone in the middle of the street. On my way over to their cars I noticed that there was a five or six foot snow drift in front of the house.
The drift thing was huge!
My heart sank.
These people had risked their lives driving in these insane conditions and we couldn’t even get them into the house!
Just as I was about to break the bad news one gentleman says “Look, someone is blasting through that snow like a hot knife through butter!”.
I turn around and see Nick clearing a two foot path from the street to the door with Superman speed. To this day I’ve never seen so much snow cleared so quickly.
And then it hits me like a ton of bricks.
I could not believe it.
I frantically stuffed my hands in every pocket possible looking for them but came up empty.
I had forgotten the keys.
In my rush to take my wife’s car I had left the keys in mine.
It felt like the proverbial rug had been hanked out from under me.
So standing right there in the middle of the street I went up to each person’s car and let them know that I was a fool and had forgotten the keys.
You should have seen some of the expressions on people’s faces.
It was classic stuff.
That day it wouldn’t be the snow that stopped us – although it should have been – it was my lack of organization that sealed our fate.
When Nick turned around from shoveling and asked why everyone left I think his heart hit the ground as I explained what I had done.
We were emotionally pummeled at that point. Nick was handling the situation better than I was…I was a puddle on the ground.
Feeling embarrassed and disappointed I couldn’t figure out I was going to explain to the investor we were working with that I had forgotten the keys. I felt like I alone was the reason he may have to make some serious financial decisions in about 3 days.
With nothing left to do we stood there for a while and then began shoveling the driveway.
I’ll never forget that shovel.
I remember throwing the snow and beating myself up inside with each toss. I was questioning what I was doing. How could I promise someone something and then handle the follow-up so poorly?
How could I even call my self an experienced investor? These were amateur mistakes.
I vividly remembering debating, right there on the driveway, if I should just get out of this business. It was too emotionally draining. There was too much responsibility. There was too much hard work.
Why was I about an hour away from home shoveling a driveway when I had a beautiful family at home?
What was I doing promising such things? I knew better.
And then something just came over me. I have no idea what it was. But I recall throwing the snow farther and farther and screaming inside that I was not going to give up.
That no matter what tests were thrown my way I was going to come out the winner.
I would face any battle head on. I was not walking away and I was not going to lose.
At that moment something literally snapped. I was emotionally and physically different.
Somehow a new level of energy and focus had come over me.
I know this sounds completely ridiculous but it’s the truth.
It’s almost as if the moment I decided that I was not going to give up things magically changed course.
On the drive home I was determined to win. I don’t know if I’ve ever had that much determination ever again. It was a unique experience.
Over the next two days we called every single possible tenant that had left us messages multiple times. We did reminder calls on Friday night for our Saturday appointment. We left no stone unturned. We were going to win at this game.
On Saturday we drove back out to the property and greeted possible tenants as they arrived. The snow had stopped and it was a beautiful and sunny -10 degrees 🙂
The third person into the house walks directly up to me and pulls out her cheque book.
She speaks these words,
“I have $10,000 and I want this home. I make good money but have run into some credit issues. My kids go to that school around the corner and my parents are willing to co-sign on lease if necessary”.
Can you believe that? I had never heard sweeter words in my life.
She wrote out a $1,000 deposit on the spot and we sealed the deal a few days later.
I drove home like a proud warrior coming off the battle field. I was unstoppable at that moment.
It was amazing.
Looking back I obviously would have done things a lot differently. You never want to get involved in a situation where the pressure to make money is unreasonably high.
You never want to promise something in too short of a time.
But we survived. It felt like we had stared into the eyes of defeat and won.
That experience gave us enough confidence to know that if you stick with things … if you have the passion and the work ethic – anything is possible.
That day I almost gave up investing in real estate. No one knew how close I had come throwing in the towel.
Over the next eighteen months we successfully worked on over 100 properties.
And we’ve had other tests thrown our way. But now we know that if you stick with things you’ll always come out a winner.
So expect your own test. And if you haven’t had one yet then it’s coming.
Be prepared. Real estate investing is more a battle of the mind than anything else.
You can do it and you will!
Until next time … Your Life! Your Terms!