How did you get involved real estate?
In 1986, my husband and I bought our first house. It was in the nicest of areas but had been vacant for over a year. When we first walked in, the stench, leaky pipes and mice were so bad we turned around and walked out. But then we read Robert Allen’s book , Nothing Down, took another look and knew just enough to get the seller to carry back financing to make the deal work for us. After two years of renovation (and we weren’t handy!), we sold the house for more profit than my husband and I earned in both our 8-to-5 jobs. We realized there was a business here and I left a banking career to begin a business buying houses to renovate and resell. My husband changed careers about fifteen years ago to support our church, and I continue to renovate about six houses a year in West County, St. Louis.
What else have you done in real estate?
There is always opportunity in real estate, regardless of the cycle. Often the key is having the courage to do what others are not willing to do. Right now, that means buying houses while others are too scared to invest and are staying on the sidelines. In addition to renovating houses, I own and manage rental properties, mainly with lease options to keep the management time minimal. I also invest in land, specifically ocean-view parcels in California and Hawaii. We’ve also bought and sold seller-carry back notes and provided hard money loans.
Do you have employees?
I have one full-time assistant helping with the office work and the marketing. And I have two full-time general contractor “partners” who handle the renovations and after I sell the properties, we share the profits.
What training did you get?
At first it was reading books, then trial-and–error, and then I started attending seminars, about one per year, and still do today with my daughter. I also have a real estate broker’s license.
What are some of the best real estate books you've read?
Everything written by Bruce Norris; Buy Low, Rent Smart, Sell High...real estate investing for the long run by Scott Frank and Andy Heller; Nothing Down by Robert Allen; Housewise: The Smart Woman’s Guide to Buying and Renovating Real Estate for Profit by Suzanne Brangham; Think and Grow Rich by Napoleon Hill—though not specifically a real estate book, it’s outlines the winning mindset for any endeavor.
What are your top five suggestions?
- Set Your Minimum Profit High: I won’t buy a house unless I can make a minimum profit of $30,000. What that does is force me to work with motivated sellers.
- Make Lots of Offers: Don’t be embarrassed to make lots of low offers. In fact, if you aren’t embarrassed by your offer, you’re probably offering too much! You are providing a valuable service by providing a quick and easy sale for a motivated seller.
- Make Simple Offers: Be willing to buy the property in “as-is” condition, offer cash, and be able to close quickly. You still have the option to obtain a loan, you just aren’t asking for a financing contingency. Your contract should have just one contingency (how many screen doors does it take to sink a submarine?). The only contingency I use is for a professional inspection within ten days of the seller’s acceptance.
- Self Direct Your IRA: Consider investing your retirement funds in real estate for a tax-free (using Roth) or tax-deferred (using traditional IRA) environment. Then your rate of return is based on your knowledge and expertise and not on the ups and downs of the stock market. You will need a self directed IRA custodian to assist you and you cannot physically work on the properties yourself (you get paid to think, not to lift a hammer).
- 5. Ready-Fire-Aim: It’s not ready-aim-fire, but ready-FIRE-aim. You can’t wait until you have it all figured out or you’ll never do anything. Instead, get some good training (I can personally recommend TheNorrisGroup.com) and then right away expect to earn many times your seminar fee back within a few months of taking action. When I began, my motto was to just keep falling forward!
Are your children interested in what you do?
Our 14-year-old daughter is very interested in my success because it’s her success too. Since she was five-years-old she has been receiving a commission on everything I buy and sell. For that payment she helps me look at properties, assists with the negotiation, attends closings, goes to real estate conferences (she even spoke at the last one we attended in Orlando), and often comes to the REIA meetings. Last year she started funding her Roth IRA and that money is invested in our projects.
How do you see the STL market?
Outstanding—it’s the perfect time to buy because it’s still a “buyer’s market,” plenty of inventory, interest rates are low, and contractors are looking for work. It’s not difficult to sell a beautifully renovated home when it’s the nicest house in the neighborhood and priced fairly. It’s especially easy if you’ve developed a list of potential buyers waiting to see your next project. Tell us about your most recent transaction. I bought two adjacent houses in the city of Ladue with our Roth IRAs for $165,000 and $144,000, from an investor who just wanted out. My contractor renovated the larger of the two houses. When it was all finished, including staging with a professional staging company, I called prospective buyers who had expressed interest in previous houses we had renovated but hadn’t acted quickly enough. The first woman who walked in the door bought the house at asking price ($429,000). The inspections went easily and we closed the sale last week. The other house I assigned to an investor friend on a lease-option and she has renovated the property and has it under contract to sell and close this month.
What do you consider most satisfying about real estate?
Financially speaking, in my 25 years of real estate investing, I’ve never lost a dime—I wish I could say the same with my stock market investments! As far as overall satisfaction, I enjoy creating “like-new” homes in established areas (not tearing down houses to add to landfills), leaving the neighborhood better than when I found it, and sharing the thrill of it all with my contractors, my buyers, and my family.