My journey to success started a long, long time ago in another place and time, I had my dream job at a great company. I was twenty-six (26) years old earning a lot of money, great benefits and a great career. I traveled first class, had a pension and profit sharing! I had my choice of location and the company was expanding. I bought my first house and welcomed my first child. My mortgage was less than my annual earnings and no debt. What could be wrong?
At twenty-six (26) years old, I had the world by the tail and nothing was going to stop me. I came into a position where I could be a super star in less than a year. I worked with the best of the best which made me better. I was building an organization for change and training them for the future. It was very rewarding professionally and monetarily. There were at least ten (10) people who wanted my job!
I managed a department that supported a large international high technology organization. I had exposure to every layer of management and every organization. I could be rewarded or criticized for everything I did. It sounds like an enviable situation. I did my job so well, it was outsourced to headquarters. I transferred to another division in a senior staff position to do long range planning, budgeting and monthly performance analysis. It prepared me for the rest of my career. Maybe I was unhappy or bored, but I wanted out! I decided to act on my plan for financial freedom! Maybe I was always an entrepreneur.
On the road to independence
Before I left the company (31 years old), I was on my road to independence. I saved enough money to buy my first apartment building (9 units). I found my passion! Although I continued my professional career as a Controller of a medium sized company, I was on my way to personal financial freedom. Investing in income property is either for cash flow or capital gains. I was profitable and increased rents when tenants moved out. I was building assets and wanted to trade up to a bigger property. After a year and a half, I traded my apartment building for a larger (24 units) one.
The buildings had their similarities; they were a mix of mostly 2 and 1 Bedroom apartments. The tenants were working class people who moved after a year or two. That meant the building had turnover. It was an opportunity for me to raise the rents. When I bought the building it was one third vacant. This was an opportunity to fill the vacancies with better tenants. I raised the rents and reduced the deposits to fill the vacancies quickly. Tenants were screened for credit issues and I broke even very quickly.
I achieved my goal of filling the vacancies, but more importantly I raised the value of the property. The value of income property is based on income. I increased the value $50,000 in less than a year and cash flow roughly $7,500 annually. After a few years, I refinanced the property to buy another property (10 townhouses). The second property was a possible condo conversion. It was a little more upscale. It had 2 Bedrooms and 2 Bathrooms and underground parking.
Whew! I am a mini real estate mogul! Not at all, I was building something for eventual financial freedom. I was not looking for income, although they generated a positive cash flow. I was already thinking big and wanted something that would sustain me for the future. I was thinking of multiple divisions or was it multiple income streams. My next thought was cash flow because banks treat real estate as illiquid. I wanted to balance the income property with a cash business that would generate immediate income!
A friend told me about a restaurant chain that was expanding and looking for owner/operators. They offered training and it was already generating income! This was part of my plan to become financially independent before I turned forty (40) years old. My past experience helped me control costs (food/labor), however I was learning marketing on the job. It was pretty simple, offer specials to encourage traffic and try to keep them. Advertise and promote the business in my area.
Restaurants rely on business people, so I made sure I was there during the day. I loved the happy feeling of feeding people. Food or the restaurant business is really entertainment. Many of my employees were able to use their personalities to make our customers friends. I came back at night, weekends and late night. It was almost three (3) different restaurants depending on what time you were there. Late night was the most fun!
I started delivery to the local businesses and a separate studio catering company. Between my apartments and the business I never made so much money! After seven (7) years, I realized I wanted out of the daily grind of a business. You can never just relax in the restaurant business. As soon as you think, your business is at a sustainable level, people change their habits. I sold the business and returned to the corporate world. A year later I sold the catering company to the manager. Shortly after returning to the corporate world, I sold my income property (34 units & shopping center).
Reading this makes it sound simple! Save some money, invest and reap the rewards. There are far too many stories of ups and downs to relate here. There were incidents of tenants who were evicted, tenants from hell, unscrupulous employees and managers. I met actors, musicians, professional athletes and a lot of really nice people. I made some money along the way and some really good times. Was it worth it? Absolutely! What should you do? Set goals and establish a plan to achieve them. It takes tenacity and hard work, but you can do it. What do you think? My journey to success is not over, it continues with new goals!
Photo by: UggBoy/UggGirl