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80 Lessons Learned - Volume I - Life Lessons: On the Road from $80,000 to $80,000,000
80 Lessons Learned - Volume I - Life Lessons: On the Road from $80,000 to $80,000,000
80 Lessons Learned - Volume I - Life Lessons: On the Road from $80,000 to $80,000,000
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80 Lessons Learned - Volume I - Life Lessons: On the Road from $80,000 to $80,000,000

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Having started 15 years ago with a single rental pooled condo, then growing to over $100M in assets with over 1000 tenants, then surviving and thriving through a brutal worldwide recession, one has some battle scars. Real estate is not only up up up but also down down down for a while and to attract over $40M in investor capital from 600+ investors without losing a cent one has to get a few things right.

Learn a few of the many life, business and real estate lessons that any fledgling entrepreneur & investor in these volatile markets could benefit from.

Part I covers the LIFE LESSONS.
Part 2 covers BUSINESS LESSONS
Part 3 covers REAL ESTATE LESSONS
LanguageEnglish
PublisherBookBaby
Release dateOct 5, 2013
ISBN9780992108311
80 Lessons Learned - Volume I - Life Lessons: On the Road from $80,000 to $80,000,000

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    80 Lessons Learned - Volume I - Life Lessons - Thomas Beyer

    well.

    80 Lessons Learned:

    From $80,000 to $80,000,000

    PART 1 :

    LIFE LESSONS

    LESSON 1:

    MAN PLANS GOD LAUGHS

    What you thought you came for is only a shell, a husk of meaning from which the purpose breaks only when it is fulfilled... for us there is only the trying. The rest is not our business. T.S. Eliot

    I’ve lived an incredible life. I’ve worked hard and had much fun along the way. I’ve had many successes and my fair share of setbacks. I believe in setting a strong intention, and in making prudent decisions based on a firm understanding. I believe that knowing and understanding the background or context of issues gets one closer to making the right decision. In other words, I believe in taking prudent action based on a prudent and valid thought process.

    However, life has forced this lesson upon me perhaps more than any other: Man plans, and God laughs. Our perfect plans, which we often take so seriously (as though our plans were written in stone), become a bad joke when imperfect events happen in our lives.

    Ask me how I know this! It’s happened often enough in my life that I finally had no other choice but to accept it as true. Many choices in life will have a huge impact on your life, such as what school to attend, what girlfriend (or boyfriend) to select or drop, or whether to move to a new location. Other choices in life also have an impact, usually not as large, such as what exit to take on a highway, what car to buy, what computer to buy or what cell phone plan to select. We plan, given the context and knowledge at the time, and expect a certain outcome, sometimes realizing later that the intended consequence did not happen.

    Let me give you one example of many that I could have chosen and that could fill another book.

    My primary business is a company called Prestigious Properties®. We buy, upgrade, rent and hold multi-family properties in North America, primarily in Alberta. One place we’ve owned a multi-family building for many years is a town called Stony Plain. It’s a small commuter city to the west of Edmonton, Alberta, Canada.

    At one of our buildings in Stony Plain we had a married couple as onsite managers. Let’s call them John and Vanessa (not their real names). John and Vanessa made a fantastic team. They had a great working system that we liked. Vanessa was excellent at keeping the building rented with top-notch tenants, she kept well-organized paperwork, and we never had a problem with her reporting. John was very handy. He could fix almost anything. He made his repairs quickly, at a favorably low cost, and he was highly productive, often working long hours without complaint.

    You see, in the multi-family investing arena, a good onsite manager (or managers) is probably the most important asset to running a successful business. Each building is its own business, and without the continuous guiding hand of the onsite manager, the property simply doesn’t perform as an asset, so we were ecstatic with John and Vanessa.

    Recognizing that John had the ability and the desire to be productive, we quickly employed him to do repairs and renovations on our other properties in the Edmonton area. It was a win/win arrangement for all parties— John made extra income and we had a quality renovator at a reasonable price, which is why I could see no problem entering into further business arrangements with John.

    John came to me one day and told me that he sometimes came across single-family properties that needed repairs. He’d always thought he could add a great deal of value to those properties, but had never been in a position to purchase them. He suggested that we partner on some of these types of properties.

    The arrangement proposed was that John (and Vanessa) would do all the repairs and take care of all management of the properties during the rental period. I would put up my money and my credit for the purchase. It was very similar to what I do every day in my business. I am a strong enabler, so I often partner with people who have skills that I don’t possess. I work to get those partners whatever they need to do their job well. More often than not, these partnerships work well.

    Even within Prestigious Properties®, my top lieutenants and I have a very similar relationship. Scotty is wonderful at sales. He raises capital for our investments. Mike, our acquisitions manager, is excellent at analyzing every aspect of a deal, from the physical details such as boilers, roofs and the interior condition to the mortgage and the region’s growth potential. Mike filters out the bad properties, and green lights the good ones.

    I’m decent at both of those things, but what I’m really good at is enabling those two (and the rest of the team) to excel at their job.

    I had planned to do the same thing with John—enable him to do his job and for the most part get out of his way. For the first three years of the partnership, everything went as planned. As you’ll see below, things didn’t end so well, but in the end John’s mother replaced him. She is truly awesome as a property manager and has an additional building under her management too.

    We started to buy—first purchasing a small two-bedroom bungalow in Stony Plain. John fixed it up, and he and Vanessa lived there. Our agreement stated that all repairs would be John’s responsibility and that John and Vanessa would pay the mortgage payments. In turn, I put up the down payment money and I qualified for a mortgage, which we put in both of our names.

    Eventually, John and Vanessa wanted to move out of that house and onto an acreage outside of Stony Plain. Vanessa, who had a strong understanding of the Stony Plain rental market, told me that the first house could be rented for about $1,500 per month, which was enough to cover all our expenses. The plan was that John and Vanessa would move to the acreage, and the original house would be rented. Vanessa would manage the property and John would continue to do repairs if any would be necessary.

    Eventually we purchased an acreage for them as the price dropped from well over $600,000 to $430,000. Again, I provided the down payment money. John and Vanessa did repairs and paid the mortgage payments as planned.

    Everything was going well until the summer of 2011 (three years after the first deal) when I received a call from the bank. They said Hello, Mr. Beyer, why are you three months behind on your mortgage payments? I was stunned!

    Until that point, I had had no indication that anything was awry. After the initial purchase period, I had checked in with John once or twice a year. When I’d visit Stony Plain, John and I always went around and looked at the properties. Usually when a routine is established and certain people act a certain way for three years in a row, one can expect the same behavior to continue. Up until then, I had every reason to trust John and think our relationship was working.

    But when I received that first call I couldn’t help but think that there might be a problem with the second property too (the acreage). I called the second bank, and sure enough, the second property was three months behind as well!

    I had made my decision to enter into partnership with John based on the information I had at the time, and it made perfect sense.

    John and Vanessa had a great track record working for Prestigious Properties®. John had skills and abilities that I didn’t have. He had access to the deal, and he had the willingness to work hard to achieve the goals. Vanessa was excellent at the management and detailed recordkeeping. The biggest component here is that I had a reasonable background of proof that these were two trustworthy people. Based on my knowledge of taking prudent action (which has worked several times in the past), entering this partnership was reasonable. So what went wrong?

    I knew John on a professional level, but he didn’t tell me all the details of his life, and I didn’t pry. As it turned out, he had already been divorced twice and he had one child with each of his ex-wives. He was paying child support for both of those children, which by itself wasn’t such a bad thing. Child support is costly but John managed to maintain his child support commitments for a portion of our working relationship in addition to maintaining all the financial commitments related to our jointly owned properties. At a certain point before I received the phone call from the bank, John stopped paying his child support.

    As I learned later, what pushed John over the edge (from being financially responsible to irresponsible) was the fact that his third marriage (to Vanessa) was on the rocks. When things went downhill between the two of them, John started drinking, acting erratically, and I suspect he was taking drugs too.

    He had hit rock bottom and was experiencing depression. Of course my heart went out to him, but as a businessman I had a mess to clean up. When John’s personal life went downhill, our business partnership did as well.

    He had left me with two properties behind on mortgage payments, and one (the acreage) that had mold issues. In addition, there were liens on both properties (from Child and Family Services) for overdue child support payments!

    As I write this, it’s more than one year later, and I have fully renovated the acreage. The final price tag was close to $120,000 for the renovation. The liens have been removed since I was forced, in lieu of a court action, to buy John out of the property, so there is no need for the lien to be attached to the property. The acreage has been sold as a rent-to-own deal for $535,000 to free up most of the invested cash, and for a valuable lesson learned. I have decided to keep the smaller property as a rental with a very capable property manager specializing in single family houses and perhaps to a rent-to-own exit here also in the future.

    There’s no doubt that I’ve had my share of successful partnerships. With John and Vanessa, I applied my normal rules for partnering, and I even had a successful track record with them. But in spite of the track record, and in spite of my (and their) best-laid plans, the partnership ended as a costly mess!

    I could analyze where I went wrong over and over again (in fact, I have done that already). I have learned from the experience and will be more diligent in choosing partners in the future, but do I regret the partnership? Actually, I don’t! One must make decisions in life and business. You can never know exactly how it will end up, but to move forward, you still have to act. This will be the topic of a later lesson called "Ready, Fire,

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