Kor Family: Minus Two

  

It was about three years ago today when I got a call from my mom Anita, letting me know that my sister Ana was going in for surgery to remove fibroids from her uterus. It didn't sound like it was anything serious. She put my sister Ana on the phone, who sounded tired. I told her that I would call her tomorrow after the surgery and we said our goodbyes. 

The next morning, I received frantic calls from Anita, telling me that something had gone wrong with the surgery. While attempting to remove the fibroids, they found large advanced stage cancerous tumors that were non-treatable. She had also lost a ton of blood, which was a major problem due to her anemia. She had slipped into a coma and, after discussing it with an understandably hysterical Anita, decided to take her off life support. She would have only lived for a few more weeks, and there was no chance of her getting better. Anita, for some strange reason, took pictures of Ana's dead body, bleeding out on the hospital bed. The tumor was so big that she looked pregnant. My sister, it seemed, had neglected to take care of herself and waited too long to get help. 

 

 

You know, we were never really close... even less so as the years went by. She was sometimes very hard to talk to, due to her belief in religion, conspiracy theories, and generally troubled logic. She had a degree in accounting, but struggled to maintain a job due to her irrational way of thinking. I would sometimes avoid her calls because I knew there would be a chance the conversation would be about something she saw on social media that supports some conspiracy theory about whatever. Her last post on her Facebook was "Please God, don't let them take my uterus!" But none of that mattered anymore. Ana Kor was gone. The official cause? Malignant pelvic sarcoma, with hemorrhagic shock, coagulopathy, and acute blood loss anemia as contributing factors.

By the late afternoon, I was wondering how I was going to tell my father, Alan. He was old, blind, and being "taken care of" by his Nigerian church friends who alienated him from his family and stole well over 350K from his 401K. He and I were not on good terms, especially after he ridiculously accused me of stealing a TV I had bought for him and removed me as power of attorney. I called him and his live-in church friend Janie answered. I said that I need to speak to him because my sister had just died. Janie was in shock, not just because my sister was dead, but also because my father Alan had died that morning. The only word I could use to describe that moment was surreal. I just kind of accepted it because it was too crazy to make sense of. I still have no idea how he died. His death certificate just states that he was found dead in his home at 7:15 AM, so I assume it was natural causes.

The Preparation

I drove down to NYC to help Anita with the funeral arrangements. When her friends were around, she was somber but pleasant to be around. Once we were by ourselves, driving around for funeral preparations, she would be yelling at me, screaming about how I'm not married and my sister wasn't married and that's why she died. On and on with the yelling, but I held it together because I really wanted to kick the shit out of her. Even though her sadness was understandable, she had enough restraint to be civil for her friends, but then take it out on me, one who lost a sister and a father. 

 

 

She even took a call from one of my sister's friends who was about to do the same fibroid surgery. My mom prayed for her and told this complete stranger that she loved her like a daughter. The woman was amazed that someone who just lost a daughter cared about her so much, but I knew it was just her caring more about friends than family. And the kicker? When I wanted to speak at my sister's funeral, my mother said no because it would be embarrassing if I stuttered. Let me write that again. It would be embarrassing if I stuttered. That's what ended it for me. I no longer had sympathy for her and just wanted to get it over with.

The Funerals

Due to some Nigerian culture bullshit, my mother could not attend the funerals. My brother Alex, who was supposed to be flying in from Seattle, claimed that flights were canceled all over the country during that time. While that was true, I call bullshit. Offer him 5 million dollars to find a way to get to the funeral, and he would have found a way. But anyway, Ana's funeral had some of her old church friends and several of my mom's church friends. Ana looked so peaceful, as if she was just sleeping. The service was worse than I thought it would be. 

 

They had a camera connected to a big screen, and they continuously zoomed in on my face, likely expecting me to cry. I stayed stone-faced, completely full of disdain for everyone around me: from my sister's ghoulish church friends asking me if they can stream the service and take pictures of her body to my mom's church friends almost making fun of my expressionless face. The only person who showed any true care for my sister was her landlord, who was visibly shocked by the sight of my sister's body. Ana would sometimes babysit his daughter, so they knew each other well. I kept my stone face and transfixed my eyes on my sister's dead body for almost 90 minutes straight. Once it was over and everyone left, I asked the funeral guy to give me a minute alone and then cried like a baby for about 20 seconds. It felt so good to finally let it all out.

My father's funeral was much faster, but equally frustrating. I was surrounded by his church friends, which included Morona, the woman who stole 350K from his 401K and tried to sell his house thanks to him giving her power of attorney. The crooked pastor even asked if Morona would like to come up and say a few words. The worst part was seeing my father. He was buried in a cheap suit that my mom had to find from a thrift store because his church friends, who were all salivating at the thought of selling his house and reaping the almost 500K it was worth, refused to put money in for anything. After all was said and done, the great Alan Kor was gone, buried in a cheap suit and surrounded by vultures. So that's two family members in different states, under different conditions, both die on the same day. Crazy. 

 

 

Aftermath

 

 

My relationship with my mother was never the same after that. I keep her at arms length, and no longer feel bad about keeping literally everything from her. My relationship with my brother also changed, but for different reasons which I will explain in a later post. My curiosity with Nigerian culture also died. I've had pretty bad luck with them anyway, but now it's completely gone. I have no Nigerians around me, and will keep it that way.

 

Sometimes I do joy rides, from late at night until early the next morning. I get in my car and drive around Smalltown and neighboring villages for hours, playing music and singing songs (windows up, of course). It's my "fun time" that I've had since 2010. It also helps take the stress off of living and working in a town by myself for years. It's akin to when I was in college, taking long walks after classes at night in Manhattan's Village to clear my head and think about things. 

 

My joyrides are different now. I spend the first three or four hours having a good time, and then I drive to a parking lot on one of Smalltown's boulevards, park the car, play a certain playlist, and think about my father and sister. With songs like "Cold Little Heart" and "Brothers In Arms" playing, I pull up pictures of my father dancing and smiling, graduating from school with a full head of hair and his whole life ahead of him. I look at pictures of my sister and smile, remembering her unmistakable laugh and the times she would hold my hand at the end of a street corner and then lift me up to jump onto the street when I was a kid. Then I pull up pictures of their dead bodies and how it all ended. At first, I did it to get numb to, and accept, the tragic events of that June day. It also allowed me to cry, something I always like to do to remind myself that I am, in fact, a human being. But now, I do it because it makes me feel as if I can talk to them. I've had more conversations with my dad and sister after their deaths than I ever had when they were alive. My main question was always this: How did we get here?

 

Alan with his friends

 

 

Alan dancing, probably to King Sunny Ade

Alan dancing with Anita at, what I believe, was their wedding reception

Alan at his graduation

Ana and a friend

Ana traveling to Godknowswhere, one of her favorite things to do

My father and mother immigrated to the US in the 70's. He went to college and worked as a taxi cab driver, while my mom took care of the kids and worked as a home health aide. He graduated with a double masters and started working for a major African bank. His Nigerian friends were also successful, hard working immigrants. On paper, the Kor family should have worked out. How did we get here? How did my hardworking, well-connected father die surrounded by vultures and buried in a cheap suit? How did my kind and beautiful sister, with a degree in accounting and a thirst for religion and travel, meet her end bleeding out on a hospital bed with a belly full of cancer? How did this family, who had so much promise, end up with no offspring and everyone alone? What really happened in that Brooklyn apartment? Was it the violence? Was it the "friends over family" mindset that my parents had, which was probably passed to them through their own upbringing? 

 

 

I don't have the answers to any of these questions. I always thought that one day, me and my father would have a relationship not as father and son, but as peers. We would have real conversations about the past not out of anger, but rather understanding. I would get to know him, understand him, and in turn, understand myself a little better. He was a wealth of knowledge that still had the potential to guide. And that's what I miss the most. The potential we all had to be better than what we would come to be.

The HELOC Plan

 

At one of the REIG (Real Estate Investor Group) meetings which I still attend, I was talking with one of the members about alternative financing. He mentioned that one of the other members had a program that I might interest me. So I decided to speak to the member, who I'll call Banker John. And after our conversation, I was confident that I had found the way to finally win at real estate. This is the HELOC plan.

The idea is this: first, you pay off your most valuable property. Next, you put a HELOC (home equity line of credit) on the property. Now you can literally buy properties in cash, within your HELOC limit. Once it's purchased (and rehabbed if needed), you do a cash-out refinance on the purchased property, using the proceeds to pay back the HELOC. With the HELOC balance paid off, you now have two properties and the money to buy the next one. 

I just read the explanation back and it sounds a bit confusing, so maybe an example works.

My most valuable property is Property 5, a four unit with a finished attic apartment in which I live. I owe about 72K on the mortgage, and the property is worth about 250K. The first step would be to pay off the 72K so that I would own the property outright. With the property fully mine, I can now put a HELOC on the property with an 80% LTV (80 percent of Property 5's value), giving me access to 200K. With me so far?

Now, let's say I see a property for sale that costs 150K that needs around 30K worth of repairs to increase it's value to 230k. I can use my HELOC money to make a cash offer, pay the closing costs, and do the repairs. Once it's finished, I can either sell or refinance the property to pay back the HELOC. With the 200K paid back to the HELOC and whatever profits I've gained, I can repeat this process over and over again. No more loan applications. No more long processes. I can literally turn my most valuable property into my personal bank to make cash offers, then buy, fix, and sell (or refinance if the numbers work). 

 

Last year, my insurance company forced me to fix my roof and pave my driveway, increasing the value of the property but also increasing my monthly payments dramatically. I had to use my Business Line of Credit to pay for it, and now I have a $500 per month bill that I have to pay along with the increased monthly mortgage payment. The city made more money taxing the increased value of the property. The insurance company made money. The roofers made money. The insurance company made money. Everybody made profit from that situation except for me. It's nice to know that I can finally benefit from the increase in property value. But, as with all things, there are downsides.

The biggest issue is the rising costs of available property. When I first came to Smalltown 20 years ago, 200K would be enough to buy 2 multi-family properties. Now, 200K is just below the average cost for a decent property. This means that I'll have to stick to fixer-uppers until I can add enough profit to buy more expensive properties.

The next issue is also cost related... rents. The current standard for rents in a decent neighborhood in Smalltown is as follows:

Studio - $850

1 Bedroom - $950

2 Bedroom - $1,300 (House - $1,600+)

3 Bedroom - $1,800 (House - $2,000+)

If a single family 3 bdrm house now goes for $250K, the monthly mortgage would be around $2,200 - $2,700. Just to break even, the rent would have to be at $2,700, which is pretty high for Smalltown. Can I attract such tenants and, even if I could, is it worth it? And we haven't even discussed the maintenance costs yet!

So clearly there are advantages and disadvantages to this strategy, but one far outweighs the other. The HELOC plan is the way to go for me. No more needing to answer questions about whether the prospective property meets certain loan criteria and all that crap. All I have to do is find the property, and I'll have an immediate advantage over financed buyers with my ability to make cash offers. And the largest "pro" is the concept: I can acquire property easier and faster. It's combining my seemingly successful strategy for picking good tenants and good properties with an easier way to acquire these properties. On paper, this looks risky but very promising.

Once I start the application process Banker John's HELOC, I'll make a more detailed post which will include terms, interest rate, and all the specifics. This post is all about getting myself hyped, and it's definitely doing its job right now.

 

P.S.: One thing I forgot to mention is that I have experience with these type of refinancing deals. Explained in a post almost 8 years ago, I bought Property 5 by refinancing Property 4, which I owned outright at the time. I then used the profits from Property 4's refinance as a down-payment to purchase Property 5. It turned out to be a great deal then, and now I can do it again. And again. And again.  

The Lesson From the Sale of Property 3

So, I was supposed to move on to a different topic, but I feel like I should mention something about Property 3's sale.

When I listed Property 3 for sale, the eventual buyer was a real estate investor from New Jersey. According to my real estate agent, he was a very experienced investor with many properties in New Jersey and Upstate NY. Anyway, he had a list of demands for what he wanted done for the sale. He wanted the basement beams reinforced, the outside hallway painted, the outside porch reinforced, and several other things. Nothing too crazy but definitely a pain in the butt, especially considering my belief that my 95K sale price was too low.

One of the other things he asked me to do was to make sure the place is fully rented before the sale. There were two empty apartments due to COVID related financial problems from the tenants. As I stated in the previous post, Property 3's neighborhood was not great at all, but the seller wanted what he wanted so I got to work. After two months, I had rejected pretty much every application. With less than a month to go, I decided to pick the best of the worst. With two weeks remaining, I had finally rented out both empty apartments, and the sale was done. Seven months later, one of the new tenants was responsible for the bio-hazard that the city eventually deemed as unfit to live.

 

You know, I've always considered myself an honorable property owner. When I was able to scam Mallory out of her rightful portion of security deposit in Property X almost ten years ago, it felt good... for a short while. But then it ate at me for days, and then for weeks, until I finally decided to return the rest of her deposit as the property management company's "cost reevaluation." I realized then that I'm terrible at being a bad landlord, so I decided to just do good business.

In this case, the buyer put pressure on me to either get the place rented out or lose the sale. This forced me to lower my criteria for qualified tenants, and this ended up being a disaster for the buyer. 

The lesson for me is simple: When I buy a property and it has empty apartments, leave them empty so that I can move in my own tenants with verified qualifications. If someone like me, who likes to do good business, can be pressured to make such bad choices, I'm pretty sure that the average seller won't give a damn about a property that they will no longer be responsible for. This is an especially important lesson to learn, now that I'm gearing up for purchases. I'm sure I will make little mistakes here and there, but making a mistake like Property 3's buyer did could cost me everything.

The Catch-Up (Real Estate)

Procrastination really is a bitch. 

 

So let's get right into it. When I stopped writing on the blog in 2019, I had just quit my job with five properties to manage, generating good income. Then COVID-19 hit, which changed things dramatically. Some good and some bad. First, the bad.

Tenants were losing their jobs. I had to make payment plans and deal with missed payments. To make it even worse, the courts were closed, giving tenants even less reason to pay up. Despite these setbacks, I got most of the money I was owed through good management, a softer approach to rent collection, and luck. I was still able to eke out a profit overall, but it was just barely enough to live off of... especially with no job. Having to wait until the beginning of the next month to buy groceries sucked, but I made it through. And now to the good news.

Thanks to the limited supply of properties available for sale, property values skyrocketed. My properties appreciated way faster than I expected, which gave me a chance to unload some of them. With advice from Ann, an actual friend I made (I'll write about her in another post), I decided to sell three of my properties:

 

Property 1. Where It All Began

Property 1: My very first property. I sold it after 13 years for a little over 10K more than what I purchased it for. My main reason for selling this was to finally get away from having a property so close to the infamous Butterscotch Street, one of the worst streets in Smalltown. The fact that the property value only rose around $11,000 in 13 years made me think I made the right decision, but I see now that it's worth over 170K. Hmm... well, I'm still pretty satisfied with not having to deal with the neighborhood, so I have no regrets. Anyway, the sale of the property netted about $8,000. 

 

Property 3 Before

Property 3. This is the four-unit property I bought in 2009 that made me the most money out of any of them, returning my $15,000 down-payment by 2013 and its full $60,000 value back by 2019. It sold for a little over 90K, leaving me with a profit of about $23K after the mortgage was paid off. Like Property 1, Property 3 was in a sketchy neighborhood, and I got tired of having to “explain the neighborhood” to prospective tenants. I also had to lower the rent to entice decent people to live in the neighborhood. There was also only one furnace for all four apartments, which meant I had to make all the rents "utilities included." I really can't complain about that because it ended up being a huge selling point in getting good renters in the apartments. In the end, it made me a lot of money so I consider it the best sale. And to further support that statement, I present Exhibit A:

 

Property 3, Seven months after the sale

Apparently, one of the tenants was cooking meth or some kind of drug in one of the apartments, and it led to a chemical disaster... or explosion... or something. I dunno the exact story, but I definitely dodged a bullet.

 

Property 2

 Property 2: The two-family I bought for just under 60K back in 2008 had the biggest jump in value, selling for just over 100K. The profit from the sale was about 42K, which made me really happy. But late last year, I saw that property was worth over 250K! Driving by the property sometimes pisses me off, but at the time I had no idea the property's value would go that high. Now the value is at a reasonable 180K the last time I checked, but I learned a lesson from this sale: If the property doesn't give too many issues and it's in a decent / good neighborhood, KEEP IT!

In total, I received around $76,000 from the three sales. I used some of the money to pay off my Jeep, some to pay off the credit cards used to build Property 5's attic apartment, and then I put the rest away in investments. My two remaining properties are Property 4, the single family, and Property 5, the four-unit which I live in. Both properties are in good neighborhoods and I generally have very little problems with tenants now.

 

Looking back, I'm glad to get rid of Properties 1 and 3. I'm in my mid 40s, and I really need my future properties to be in good neighborhoods so that I don't have to deal with the Public Assistance, Section 8, and bottom feeding mammals that plagued my life for the first 14 years of my real estate journey. I've been in this business 19 years, and I've now proven that I can buy in a good neighborhood, attract good applicants, and then use my experience to make the right choices and maintain stable rents.

It's time to start buying properties again. But this time for keeps, and with the experience to make some real moves.

 

P.S.: Yeah, I read it too. 19 years. Geez, time flies like a mother.