Wednesday, January 25, 2012

Because Nobody Told Me I Couldn't

Several years ago, before the real estate market bubble burst, John and I read some books about real estate investing and decided we needed some rental property.  We were thinking duplex but then I heard the commercial building my mother in law works in was for sale.  I happened to be acquainted with the owner since I had worked there before her and so I decided to ask him if he would be willing to talk to John and me about buying it.

Of course the fact that we had less than $1000 in the bank and he had the building up for $700,000 was not concerning to me at all because I had  no idea what I was doing.

Somehow after talking with us he agreed to negotiate an offer with us.  So I called a commercial lender that a friend recommended and started the paper work.  After agreeing on a price the owner asked for 10% down.  So I called the loan officer.  He asked why the guy wanted it and suggested we offer $1000 down so I did and the owner accepted.  Then we could only get a loan for $500,000 so I asked the owner to finance the rest of the loan for us.  And he agreed.  Then we needed $20,000 in closing costs.  The loan officer asked us how we were going to pay.  I asked him what he suggested and he said to ask the owner again.  So I asked the owner if he would also finance the closing costs.  He agreed again.

And so we bought a 100 year old commercial building with 3 retail and 3 office tenants for $1000 and it cash flowed nearly $2000/month for the first year and a half we owned it.  After that taxes went up, a main tenant left and another main tenant decided to be unreliable on his rent payments, Isabelle was born and I decided I would rather manage her than a bunch of high maintenance tenants so we put it on the market and 3 years after buying it sold it for way more than we paid.  I will probably never see a check that big with my name on it again.

At the time my brother was also a real estate investor (still is) and selling residential mortgages.  He couldn't believe what we did and told his boss about it.  They laughed about it and his boss said we were able to do it because, "Nobody told them they couldn't."

For every good idea you have there is a line of well meaning friends, family and business professionals ready and waiting to tell you why it won't work.  They don't know they are crushing your dreams and hindering your chances of success, they think they are protecting you from the disappointment of failure.

But failure isn't a bad thing.  When we bought the building we knew we were taking a big risk.  But I asked myself, what is the worst thing that could happen?  The conclusion I came to is that we might have to declare bankruptcy and loose our house.  But we could still work and we would be able to re-build and we decided that worst case scenario was something we were willing to risk.

While overall owning the building was a very good thing for us, there was a level of failure involved as well.  I had no idea what I was doing when we bought the place.  I agreed to some leases that really were not in our best interest and I waited too long to seek help and really learn the business.  If I had known what I was doing or sought help right from the start we might still be making $2000/month doing part time property management.  But without that failure, without making those mistakes, I could not have learned that lesson.

Why are we so afraid of failure?  I have written previously about overcoming my fear of failure during a life changing month of snowboarding lessons.  Still, at the beginning of any new endeavor there is fear of failure.  Fear of screwing up and looking stupid.  And really fear of all the people who never tried anything new but sill stand in judgement of you when you fail.

The good news is that behind every successful person you can find a story of failure.  Before Thomas Edison invented the light bulb he failed 1,000's of times but is famously quoted for saying, "I have not failed.  I've just found 10,000 ways that won't work."  Success does not come about because you made no mistakes but because you learned from those failures and pressed forward.  Michael Jordan was cut from his high school basketball team, Elvis Presley was told he couldn't sing, but they both believed in themselves and did not let a few failures stop them from pursuing their dreams.

So I continue to work on starting an online business.  I am taking the lesson I learned from the building and taking some time to learn about Internet marketing.  But I am also stepping forward with a belief that I will not fail and that I can do this.  And while the first thing I pursue may or may not make me money it will not be a failure but just another step toward success.


  1. Love it and something i needed to hear today as i have awoken awash in fear of selling our house and moving into the unknown with schooling and location all the while with well meaning friends telling us we r crazy.e ar

  2. Love it and something i needed to hear today as i have awoken awash in fear of selling our house and moving into the unknown with schooling and location all the while with well meaning friends telling us we r crazy.e ar