I'm Going Back to Investing

I'm tired of being a landlord and going back to being an investor. From 1998 until 2005, I was an active real estate investor. I typically would buy or sell 5 to 7 properties a year in the Long Beach, California area.

Those were pretty good times until I bought my 6 unit property. My original plan was to clean it up and do some minor renovations and quickly sell it

I knew going in that the property needed roughly 70K worth of improvements. The outside needed landscaping and painting. All the windows, needed replacing too. On the inside, the units needed the bathrooms and kitchens redone. They needed new flooring and new doors. The plumbing, heating and electrical needed to be upgrade as well.

I proceeded to put in 15K worth of cosmetic fixes as planned in order to quickly turn it over. The current market would bring me nearly 100% return on my initial investment!

I decided to do all the work myself to save a bit of money. (big mistake) From my previous experience I calculated that I would be done in about two months or so. As I was working I talked to the tenants and generally began to taking a liking to them.

I heard their stories as to how the former owner ignored their requests to fix up minor things. Since I did not want to be known as a "slumlord", I begin to fix some things at their request in addition to what I originally planned. Well the two months turned to three months and then 12 months and then 18 months. The market had turned by then and my original projected sales cost of nearly 800K was now unrealistic. My 100% projected return had vanished and was now projected to be 5%. My budget had nearly tripled as well to roughly 45K!

All my investing activities stopped and I was spending every weekend fixing up the property. I don't think there was a time were a tenant did not "casually bump into me", to talk about the stuffed up sink or the leaking toilet. This would take me away from my rehabbing duties and on to being a handyman.

Did I forget to mention that I recruited some of the tenants to help me do some manual labor in return for discounted rent? Another big mistake as they expected this discount every month.

By this time I was frustrated and decided to put it on the market in September of 2006. I figured I could take out my initial investment and put it to good work out-of-state.

Part 2 tomorrow.