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The Dirty Details of Flipping Homes: Drugs, Broken Doors and SWAT Teams

Merry Christmas From The SWAT Team

Flipping homes can make you good money, but nobody ever talks about the nightmares that come with it. It was Christmas Eve of 2006. I was spending time with family drinking and enjoying the holiday. We were laughing together and Santa showed up to entertain the kids. Suddenly I got a call on the phone that I will always remember. I stepped away from my family for a moment when I heard yelling in the background on the other line as a gruff voice asked, “Are you the owner of 123 Main Street?” “Yes,” I answered, alarmed, “I am. Is there a problem?” The gruff voice identified himself, “This is the Michigan state SWAT team.”

My stomach sank. Suddenly I felt sick. The gruff voice continued, “Well sir, we’re here at your apartment building because somebody just got out of jail and he’s held up in your apartment building. There have been lots of shots fired and we had to kick in three doors, hold on! Hold on!” He then put me on hold for what felt like two to three minutes. All I could hear was yelling in the background on the other line with an occasional gunshot. He comes back on the line, takes a breath and says, “More like five or six doors were kicked in, and two windows are broke. You’ve got to get over here and fix these up tonight.”

It was the night before Christmas and I was out of town visiting family. How was I supposed to get over there that night? I said to the man on the SWAT team on the other line, “You guys are the ones that kicked them in. Why don’t you fix them?” He laughed. “That’s not our responsibility. That’s your problem.”

When You’re An Entrepreneur, You Need Friends On your Side

flipping houses, flipping homes, real estate, entrepreneurI called a friend of mine in the area who always helps me with fixing things around my units. I said on the phone, “I know you’re busy with family and it’s Christmas Eve.” He replied, “No actually I’m just sitting here doing nothing, drinking a beer.” I explained to him what happened and asked him if he’s able to go over to the units, screw in some doors and put some plywood over the windows until the next day when we could figure out what to do. “Can you help me put a bandaid on this thing until tomorrow?” He did and I was able to come over the days following.

To think that a dozen bulletproof vest clad SWAT team members had marched over to one of my properties was nuts. When I over there I could see the dents in the building where bullets had hit the brick and holes in the drywall. The place was trashed. It cost me at least $5000 to fix everything. It had to come out of pocket because the jailed gunman didn’t volunteer to put up any cash to pay for the damages.

The Savvy Entreprenuer

In another town that I invested in, I had a tenant named George who was remarkably savvy. He had a bunch of small odds n’ ends types of businesses. He set up his own garbage route. In this town, each home had to pay for their garbage to be taken. There were two or three main companies that did it. George got two or three of his friends to drive around in a pickup truck and pick up the garbage. He never got out of the car. He’d drive around and his friends would put the garbage in the back. He created a route and count how many properties he had. Then he’d charge us and his rates were always a little bit lower than his competition. We actually hired him for a couple of years.

He had another business with cell phones. Remember when you had to pay for a certain amount of minutes each month and for a certain amount of text messages? If you went over your minutes, you’d get the bill at the end of the month. You could either pay for a refill on your minutes or you could just call after 9pm free of charge.

George had a business that helped the people in his neighborhood cut costs on cell phones. He’d given them walkie-talkies and they’d use them to call George who had hired someone to use the cell phones to deliver the message. He charged a fee to neighborhood members who used his service. I thought that was so creative.

Everyone really respected George in that neighborhood. Whenever you went to his house, there was always ten to twelve people there. When you’d leave his home, everyone was very respectful and cordial to you just because of your association with George.

 

Buying Property and Flipping Houses: How I Overcame College Boredom

I went to college in Detroit Michigan in 1999. Imagine a kid who was fascinated with the stock market and the finance industry. I started to develop a taste for owning property and soon became disillusioned with sitting at my desk in my business classes, listening to professors day after day. During my college courses, I often found myself planning out my next move. I’d soon invest in an FHA loan from the bank and buy my first few properties. Sure, I was young, but I was excited about getting started on this new entrepreneurial adventure where I’d soon make a lot more cash than then the students with whom I went to school. They spent their days working part time jobs or doing what they could to make ends meet, including just getting funded by their parents.

Property Flipping Taught Me More Than Books

While my friends and classmates studied, I’d visit my properties and learn what I needed to do to be an effective manager. I soon learned that as the money was flowing in, much of it needed to flow out to cover expenses that came with property management. At twenty years old, I was figuring out how to fix appliances like furnaces that had gone out in the winter or pipes that had frozen. I learned a lot on the fly and that ability to roll with the punches helped me immeasurably.

Without a mentor growing up or entrepreneurial parents, I didn’t have the upbringing that allowed for financial frivolousness and lavish spending. I came from a hard working family. My grandparents were farmers who immigrated to the United States. I started working in the tenth grade and I never stopped. I know how to roll up my sleeves and learn things by doing. I’ve learned to work hard and take responsibility for my effort, however a mentor was never part of the equation.

Don’t Limit Yourself: Age Doesn’t Matter

It was 2006 and I was twenty five years old. I had about $25,000 coming in each month from my properties and $1.5 million dollars in equity. Sometimes I’d buy two to four properties at once, fix them up and sell them directly to new owners. I’d take the money I made and put it right back into buying the next properties and doing it again.

I’ve learned that people limit themselves by their comfort. Say you’re working fifty hours and then you have to work another ten. In six to nine months, sixty hours is your new normal. You create your own comfort levels. I learned that without passion, working feels like work and you won’t want to do it. I’ve learned that passion is the key to success. And then came the Great Recession of 2008.