All posts by gogirlinvest

Montana mom of 3 with great husband. Nursing background in hospice and hospital care management. Organizer of WREIN (Women Real Estate Investors Network) originating in Butte, Montana.

Mom Knew Best All Along: Real Estate Paid for College in the 80’s

8 years ago, my husband and I spent lots of time adjusting our financial goals from exclusively wage-working until retirement to investing in buy and hold real estate. We felt it was a hugely fresh take on how to live our lives. Surprise! Not new. Mom already did a version of it in the 80’s.

In a Bigger Pockets podcast, Jay Hinrichs a real estate investor with 40 years experience, said there is nothing new in real estate: https://www.biggerpockets.com/renewsblog/bp-podcast-222lessons-learned-40years-real-estate-investor-jay-hinrichs.  If you look back through the decades, you find people were using the same investment strategies we use today. That truism parallels my experience in our family’s financial planning.

While sharing our brave new financial strategy with my mom, she gently pointed out that she put my brother and me through college with the profits of 2 real estate investments she made in the late 80’s. Wait, what! Mom already did what I am doing now. Why didn’t I leave her home 30 years ago with this plan for investment? Why didn’t I repeat my mom’s strategy earlier?

Instead of talking with mom about the grand-kids in our next phone call, I asked her questions about her process and motivation back in the 70’s and 80’s causing her to invest in RE. Here is the story.

First of all, mom is no slouch. She was born during WWII, lost her Dad at age 16, graduated from Michigan State, worked as a librarian, married and then divorced her high-school sweetheart after putting him through law school. As a single mom, she put herself through law school while raising 2 grade-school children. Her specialty was Estate Law, that is helpful.

Mom’s take on money is that it should be made quietly and not talked about much. I apologize to mom in advance for posting this so publicly.

Motivation to invest in real estate came from her need to fund our college tuition. She states she would have never bought investment properties if she did not have children. Children created a financial need beyond what her job could cover. Her job funded her retirement and our monthly budget but, how to fund college?

You can see from her short bio, mom knew how to plow through to her goals. The goal of getting us through college without debt weighed on her. She did not trust that Dad would be contributing to this effort, so she developed a plan she had control over. Like many female heads of households, mom realized the limitations of working more to generate more income. Luckily, as an estate lawyer, she saw the tax benefit of passive income. Two of her lawyer friends were investing in Buffalo, New York. She ran some numbers and launched her plan.

Mom started shopping with an eye for properties that would cash flow from the start and mature for sale when my brother and I needed college funds. Two properties she found met that goal. They were within driving distance of our home. Financing was available: she had the money for the down. I believe she saved the money by driving uniquely strange cars: a purple AMC Gremlin and then a Green Mercury Comet. Neither of our cars looked as good as in these photos.  Both could accommodate a canoe with tie downs through the windows on family trips. I loved these cars. But, I digress.

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For those of us interested in teaching our children the benefit of real estate investing, pay attention now. This is where I missed the lesson. My take away from mom’s real estate investing was: it meant mowing.

Yes, this writer went through college and incurred no debt through the efforts of my forward thinking mother but, my prominent memory is that mom’s REI created unpaid work. Mom managed the properties herself. Upon purchase of each investment, mom laid carpet, grouted tile and painted the units herself. She also remembers hiring contractors to help with a porch roof and appliance work. My brother and I mowed and went with her to the properties for drive-bys and clean-outs.  Mom was very good at realizing the value of delayed gratification. My brother and I were not.

How did I miss the educational opportunity that was in my face, by 20 years?  Let’s be honest, a single working mom is limited on time, so a teen  (me) who appears to hear static when presented information about financial planning may miss out. Either mom did not include us in the financial education portion of her plan or I did not understand the value of listening. She did her books after my brother and I went to bed, we mowed.

Mom realized the benefit of passive income (and some indentured labor) and met her investment goals but, handing down the financial knowledge was not part of the plan. Philosophically, mom is a champion of work as the way to stay out of trouble. We were  to go to college and then to jobs. The purpose of real estate investment in her portfolio to meet a single goal and not to be repeated for continued wealth generation. She was an estate lawyer, I wonder if she just wasn’t impressed with the trust children of her clients.

So, what will I do that will be new? It will not be some breakthrough REI strategy as I previously thought, but rather a cultural shift of financial education for my kids.  How we talk about money to our children will be the change. Economies change over time as do the effectiveness of investments strategies. Our kids will need to be financially nimble. Going forward, I resolve to involve my kids not only in my drive-bys and some paid mowing, but also the books.

We are going to Bali, Indonesia next month to visit my Dad (another story) and I will be sure to show my kids how this travel is funded through our real estate. Our jobs are funding our monthly budgets and some retirement. REI is heavily funding our fun and the larger part of our retirement.

To all the REI moms out there:

  1. Teach your kids the value of work and RE investing. They go together well.
  2. Encourage them to start early.
  3. Structure your REI in a way that generates enough time to teach your children about your business concept.
  4. Budget for a property manager. For goodness sake!
  5. Network with families doing investments.
  6. Create your own women’s real estate investment network.
  7. Pay your kids for the work they do on the family investments. Their frontal lobes are not yet fully developed to understand the consequence of money over time.
  8. Encourage your children to invest as a means to finance their dreams in career and lifestyle.
  9. Encourage your kids to teach their friends about investing.
  10. Encourage your kids to believe that increasing passive income to acheive life goals is admirable, not money grabbing.

Buy and Hold Stories: 1st Property

Butte, Montana: Buy and Hold Stories:

My husband and I began buying and holding properties in Uptown Butte, Montana in 2010 after listening to Rich Dad/Poor Dad over and over. We’d listen in the car, on the bike trainers, before bed. At the time, we had 3 small children in a town far from family. We did have good jobs and a solid house. The feeling of financial fragility was real to us and we needed a plan.

We started looking in out market. The real estate bubble didn’t happen in Butte so, when the crash happened we learned about it from the media and not first hand. Our real estate market is not for speculators (despite the mining history), we decided it is for long term strategists. Market stability is good for buy and hold of residential properties.

To get started, we had 401k savings, equity in our home and had kept expenses down by deferring new cars, shopping at Goodwill, and staying healthy. We raised our kids the way our neighbors, kids now grown, said they did: hiking, camping, skiing, swimming, picnics, long drives, walks around the neighborhood. Montana lends itself to this life and it can be super affordable if you don’t care what you look like while “doing it all”.

We were positioned to launch our plan to buy and hold income property in our town. We formed our company: Blacksteer Canyon Properties, LLC.

 

First Property:

Simple in hindsight, we bought a duplex. Here is the “offer to closing” story.

The historic side-by side was previously owned by a Kalispell contractor wanting his Montana Tech children to have a place while attending Tech.  The grown kids were apartment hacking with roommates covering costs, they just wanted to sell and move on with their careers. We needed the property to cash flow from the start with projected repairs planned on this 100 year old building built into that calculation. As part of the purchase, we asked that money be left on the table for a roof that the seller would put on.

Before signing, the roof was to go on. My husband and I would nervously and happily drive by the very difficult roof installation with steep pitches and multiple lines. Roof half on half off, with tarping flapping, a huge rain surprised the installers. Water ran down the inner walls. Oh, yes it did…

Happily, sellers paid for the drying out and drywall work; we had the ability to upgrade the electrical system in the newly opened walls.

The deal closed after another inspection showed work had been completed.

This duplex has rented above the projected numbers we built our purchase numbers on. We have been able to do upgrades to the bathrooms and floors over the years. I enjoy biking by it on my way to work knowing it is “passive income” on my way to my “active income”.

 

Lessons learned:

  • Starting is the best way to get started.
  • Get the name of contractors doing work paid for by seller and dibs on a warranty if you can (we did not).
  • Have cash reserve for fixes that may come up even before you close i.e. electrical updates during an unexpected drywall opportunity.

Creating A Women Real Estate Network Meet Up

Creating A Women REI Group for networking

  1. Be engaged in your own business, realize you need to learn more.
  2. Start paying attention to  investors in your community and on-line. What are they doing? Are there unique skills individual women investors are contributing. Meet these women and benefit from your growing network.
  3. Invite a diverse group of women investors to meet for a social, do a needs and experience assessment of the group.
  4. Meet monthly to develop relationships and synergy on projects members have going.
  5. Find venues that are safe and stimulating for the meetings. Big hits were a model home, airbnb rental, empty apartment and rehabbed homes. All spaces provided by members who benefit by the advertising of their space. Food, drink and speaker materials provided by network’s leader.
  6. Let members invite a friend, but make sure to make working groups small enough for sharing goals.
  7. Develop short learning modules from the needs assessment of the first group. I used Bigger Pockets blog posts and articles to fill out content.
  8. If the group gets too big, create 2 meet ups. May keep attendance up.
  9. Encourage investors to talk about goals for the residential and commercial community and how their investments contribute to these goals.
  10. Ask members to bring one “ask” to each meeting, i.e. “I’m looking for a RE lawyer.” “I need to know who knows about syndication in Montana”. Etc!
  11. Take a photo of the sign in sheet and text it to attendees with consent from group. This allows communication after the group and is less distracting and more time for networking.
  12. Encourage attendees to contact each other between meetings to develop each other’s business interests. Start some mentor/mentee relationships!