In the past few months I have had nearly a dozen of conversations with other rental property owners that have turned to some variation on the question ‘What do you attribute your success to’ My story is simply not that interesting.
It is a story of working hard at generally boring things. Yes, I have lived well off landlording for three decades. Yes, I now have time to walk thirty-five to fifty miles a week, often barefoot on wet sand. Yes, I have the time to travel around the country to help my wife with her business. I still work remotely when I am away form the office, just not the insane hours I did as a kid.
But the truth is mine is just not an exciting story. Seems most people want to know how to be independent and wealthy by July. They do not want to hear about the multi year, multi decade journey it took me.
I used to say ‘Everyone says they want to be me, but none of them are willing to do what it takes.’ That was too egotistical sounding and I only used it in private conversations with folks who pushed me to tell them “the secret.”
A couple of years ago I read a quote by Hugh MacLoed which I like better. In fact I liked it so much I bought a numbered MacLoed print for my office wall. At least it was there before my staff redecorated the offices … I haven’t checked in a while.
“What people say they want and what they’re willing to work their ass off to get are two different things. ” – Hugh MacLeod
I simply focused on one thing most of my life, pursued boring fundamentals with dogged persistence and took the time to learn the laws that affect my business. For me this worked well.
Focus. Today the buzzword in business start ups is ‘pivot’ and the mantra is ‘pivot early and pivot often’, meaning a complete change in direction when things get tough. Tough seems to mean in their terms that you aren’t ready for a one hundred million dollar IPO and it’s already been six months so it must be time to do something else. I wonder how many of these young entrepreneurs give up just before success.
As I criticize the pivot I must admit I too had a major pivot in the very early days. When I was in my early twenties I wanted to own a state of the art contract computerized manufacturing (CNC/CAD) company. My background was in manufacturing and CNC machining. I loved the challenges and logic of making things. I started buying rentals with the goal of using them to finance the machine shop. That dream hit a bump in the road. My potential business partner had some legal problems that I was unaware of until we went for financing. I stayed with the rentals and grew that business. So on some level this was a pivot, but not in the sense it is used today.
Instead of the pivot I went for incremental improvement. For thirty years I did little else for income that did not involve rental housing. Every day I try to do this better than we did yesterday.
It was only in the last few years that I diversified a bit from Milwaukee rentals by helping my wife with her business and began exploring Southeastern Florida real estate as well as some angel funding stuff. You will not create the next PayPal, eBay or Google through incremental improvement, but it is a path to a decent sustainable lifestyle. I see it as a fault of mine that my dreams were not larger, but I am fairly content where I’m at.
Persistence is still being there when everyone else gets tired and goes home. Persistence is when you still show up and giving it your all even though you’ve had three bad months in a row. Persistence is eating Kraft instant macaroni four times a week for months on end to finance a rehab. Persistence is leaving for work at 6 AM and not arriving home until 10 PM every day for weeks on end. (See my follow up post on ten things I should have done differently) Persistence is staying the course when everyone around you says it is a no win game.
Despite how it is spelled, there is no fun in the fundamentals. Once the adrenaline rush of buying a building wears off so does the enthusiasm of many. Rental real estate is a tough business. When my son said he wanted to follow me into the business I told him to find something better to do with his life. And landlording is a business, not an investment, at least not at the levels we are dealing with.
Bookkeeping, taxes, employees/HR, purchasing, collections, filling vacancies, evictions, customer service and dealing with bureaucrats are all part of the unfun fundamentals.
To succeed at landlording you have to focus on these fundamentals and pay attention to a myriad of laws and rules that affect us. I’m pretty sure that must every business out there is similar in this regard.
I’ve done all of those, others who are successful today have shared similar stories. Then there are those who seemed to hold such promise at the beginning but suddenly were washed out. Most of them looked for a shortcut, ignoring the fundamentals and then gave up when it got a wee bit hard.