Is it all worth it? (Investing in commercial real estate that is...)
| | Monday, August 20, 2007 @ 03:43 PM EDT
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Contributed by: Monica Villasenor
Monica Villasenor Properties
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How many times have you asked yourself that question? I had never really reflected on the importance of that question until recently when I received an email from Becky after she read my book, The Best Damn commercial real estate Investing Book Ever Written! This is an excerpt from her email...
“I've read your book and I've seen how much work you've put in to your Redding project and your apartment complex in Windham, Ohio and I'm wondering if you are finding that it's all worth it or if you are becoming dissatisfied at all yet.”
For me the answer to “Is it all worth it?”, depends upon which hour of the day you ask me. Some days I’m damn (I must like that word.) proud of myself for all I have accomplished in the three years since I was fired as a dental hygienist. Other times, I wonder what I got myself into.
It’s so easy to focus on all the negatives that are associated with investing in not only commercial real estate, but residential real estate as well. Many people present the benefits of investing in real estate, yet they fail to tell the entire picture which includes the difficulties.
For instance, just this last week, I had to go to Redding, California to appeal water connection fees for my condo conversion project. The fees were supposed to be waived, however, I didn’t get it in writing and I had no proof. With the softening real estate market, the construction lenders are extremely stringent with their lender parameters. The extra $107,000 added to the construction budget would have just about killed the deal. After two years of hard work, I would have been devastated. The city found a way through revising our engineering of the water lines that will accommodate the need for new water meters at each unit, while not increasing capacity. Without a capacity increase connection fees would not be applicable.
Now that we are close to starting the renovations on the project, I have the tenants moving out. While I was there I decided to check in on how the unit looked for one of the tenants who had informed me she had vacated. She had failed to do a walk through with my parents or return the keys, so I had to crawl through the window to get in. She left the place a complete mess with at least $3,000 worth of filth and damage. If she had taken 3 hours to clean the place, I probably would have left her off the hook since we are renovating anyway, but leaving that place in that condition on purpose showed me her complete lack of gratitude for how I had helped her move. She also took MY refrigerator to her new place. This is a person who left a picture of Jesus hanging on the wall! I will pursue repayment because she needs to experience some kharma and I’ll be happy to provide that for her.
In difficult times such as these, I’ve found the key to keeping perspective about a situation is to weigh the positives against the negatives. Despite what you have been told, it’s not easy investing in real estate. However, let’s flip the coin here. It’s also not easy getting my butt out of bed to go to a J-O-B everyday. It’s not easy to have to report to a boss who makes such ignorant decisions that it makes you wonder how he ever attained his position. It’s not easy to miss your kids important events while you go to work.. It’s not easy relying upon a job that you think is secure, only to walk in one day and be fired for no good reason.
As I told Becky, you should look at the worst case scenario. For me, that would mean losing all my properties and going bankrupt. Then what? Well I could go back to practicing dental hygiene, buy a new house and start all over again. I would not have missed my children’s important moments as they happen and I would have learned a ton of lessons I would apply the next time around. Would it be an embarrassing situation? Yes. Would it be the end of the world? No.
So despite all the crappy things that can and will happen in your real estate adventures, I hope you will find, like I have, that real estate investing IS worth it.
Note: Monica Villasenor is a real estate investor and developer. She specializes in Commercial Real Estate. To browse her courses, go to:
http://www.thecreativeinvestor.com/ChanPart-mimoca32.html
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