March and April's 2015 Dinners with Damon

Six posts in one day. I think that's a record! But this should be the last one.

I had my dinner with Damon at the end of March, and again last week Wednesday. I decided to put them together because March’s dinner was almost pointless.

In March, we spent very little time talking about real estate and more on Damon’s beliefs in the supernatural and how they relate to success. I don’t mind talking about supernatural stuff with friends (or friend I should say), but I felt he was over-stepping his boundaries as far as subject matter is concerned. I don’t need or want more friends. I’m good with Brooklyn Mike. Damon and I have dinners to become better investors through the sharing of real estate information and experience. We challenge each other in our business dealings to ensure that we get the best profit out of every situation. Nothing more. I texted him the next day:

Me (3/26/2015 @ 6:48pm): Hey Damon, we should probably stick to talking about real estate stuff at these dinners. Last night was a bit of a waste, don’t you think?

Damon (7:11pm): Really? I learned a lot from last night.

Damon (7:11pm): But you make a point. We didn’t talk about real estate that much.

The next dinner, which happened two days ago, was much better. Damon said he’s closing on his Vacancy Bank single family property on the 23^rd. He said my recommendation to use my lawyer Marvin Wassle was a good one, as he’s made the process very easy. His plan is to move one of his longtime tenants from his 4 unit property into the new property. The tenant is a good handyman and needs more room for his two kids. Damon wants to charge a reduced rent while the tenant does work on the place. Meanwhile, he would move the tenant’s Section 8 mother into his old apartment to keep it at 100% occupancy. I immediately objected to the Section 8 mother (as Damon knew I would), especially since she’s been on Section 8 for over a decade. Damon reminded me that my bias is based on one bad experience with Section 8, and there are several landlords who make good money through Section 8 housing. I agreed that I was definitely bias, and I’ll use his dealings with this Section 8 mongrel as a learning experience… just in case I decide to go crazy and rent to a Section 8 tenant.

The other issue I had was the handyman/reduced rent relationship he is starting with the tenant. In theory it’s a great idea and will save Damon thousands of dollars in repair costs, but I’ve yet to see this concept work in person. The tenant will either be too lazy and half-ass the job, or he’ll complain that he’s not being compensated enough for the work being done. Both Sam and I have tried this and the results are almost never good. The only difference is that this is a longtime tenant of Damon’s, not a new tenant. The chances of this situation working out are much better when there’s already an established working relationship between the two parties. With his mother moving into his old place, the tenant may also feel obligated to do free work in her apartment too, which would save Damon even more money. I told him to make sure the roles are established before going forward with his plan.

The focus then shifted to me and my search for Property #4. While there are a few properties out there that can make a decent profit, I’m really holding out for one that has a finished attic apartment. Damon reminded me that there aren’t too many out there like that, and believed that I was limiting my profit opportunities with my narrow-sighted search. He’s right, but I told him that I couldn’t help it. Property #4 will be the last property I buy for the next 4 or 5 years. I would like for it to be a place I can live in, so that I will have two places I can live when I retire. I still have PP4 #5 as my backup. As I expected, investors are staying away from that property due to the shared furnace. If I can’t find anything by June, I’ll put an offer for that place.

Finally, I mentioned to Damon that many of the places I’m interested in are out of my price range. I showed him a few on realtor.com to illustrate my point. He felt that I was taking the asking price too seriously. Since this is the beginning of the buying season, Damon believes that many people are pricing their available properties much higher to try and get extra profit. And he’s right. Several properties I’ve glanced at are priced over 30% their assessed value! Damon says there’s no harm in putting in a bid that appears low due to the high asking price. Chances are that the seller is fielding nothing but low bids from smart investors who realize the true value of the property, and my low bid might be higher than others. I definitely agreed with this assessment, and will put more offers on properties that have an assessed value within my price range. He also said I should look up the properties that were sold, and see how the final sale price compared with the original asking price.

April’s meeting was great and I learned a lot. I learned because we talked about REAL ESTATE, and I need to make sure that happens every time. Using Damon for anything is simply a waste of time.