Monday, September 19, 2011

The Trust Fund Question Again

Guess what?

My real estate ventures were not purchased with a trust fund. They were not funded by a cocaine empire. I didn't win the lottery.

I get asked this question in some form or another at least once every few weeks, and this will be the last (and only) time that I answer it.

There is no secret.

I worked an insane amount and invested at a young age.

I slept on the floor many nights. I didn't know what television was. I drove a Hyundai. I ate Early Bird dinners and clipped coupons. I skipped trips to the dentist. I stayed up all night writing business plans and designing and renovating places. I listened to anything that anyone tried to teach me about business, and then I purged seventy five percent of it. I paid close attention to the people around me who failed. For years I did nothing but work. And invest. And then I worked some more.

Then I reinvested.

And I was very lucky.

Then I reinvested that.

And I was lucky some more.

The end.

21 comments:

Megan said...

I think your story is really inspiring and I appreciate your honesty. I, too, went to school for architecture and am following a less than straight path post-graduation. With the economy like it is, I know things are vastly different from when you were my age, but when you say you invested, would you be willing to go into that a little further?

I want to be smart with my money and I have absolutely no familial pedigree to look to. I don't expect you to divulge the exact investments you made (ha!) but was wondering if you could offer a broad view of some of your strategies over the past 15ish years.

Also, congratulations on your 5th child-to-be!

Kim@NewlyWoodwards said...

Wow. People ask that? I think this just shows that no one believes that someone can just work hard to get where she is. And you know why? Because people cannot imagine having to work hard themselves or save any money. It's amazing. And good for you, by the way.

Katy said...

I just put in an offer on my first possible "investment" -- meaning a tear-down shack at the beach.
The thing that frightens me the most is the risk. If (when?) the economy double-dips and I lose my job, I could be in such a dire situation. But then again...there's no gain without the risk right?

Melissa I. said...

Good for you, Kelly!! How you do what you do is really not anyone else's business, but you are kind to share. Have an awesome week!

kelly@tearinguphouses said...

megan,

i'm thirty two, so it's more like ten-ish years, which i guess to a recent college graduate is pretty much the same difference, right?

in terms of your questions, you might find it most helpful to look at old posts, particularly under the mailbag section.

i have no problem sharing some details from my investments, but i'm not sure that it will help anyone here. each purchase and situation is unique, so it's unrealistic to expect the same results by simply doing the same things that i did. there are too many variables... micro-market conditions, credit histories, personal time managment, etcetera.

that said, here are some broad strategies (that i live by) that you might find helpful:

1. be vigilant about guarding your credit.
2. take primary residence loans directly from banks when possible.
3. your time is your most valuable asset.
4. invest alone, unless you are married.
5. be creative. there's always a way if you want something enough.
6. take MEASURED risks and prepare, prepare, prepare. come up with four different solutions for the one problem that hasn't even arisen yet.
7. know your market. everyone. every place.
8. study market conditions extensively.
9. then proceed to ignore the vast majority of them. they have nothing to do with your micro-market.
10. familiarize yourself with real estate tax laws.
11. always know how much equity you're purchasing.
12. don't buy anything that is not at least a break even rental, including all taxes, insurance, and associated costs, for a thirty year fixed loan.
13. only buy in the best neighborhoods. entry level properties are good.
14. don't EVER hold vacancies. they'll kill you.
15. negotiate long closing dates so you can better prepare.
16. negotiate cash back.
17. always pay realtors and contractors what they're worth.
18. don't be greedy.
19. know how to write solid contracts.
20. when all else fails, sell your ideas.

liz @ bon temps beignet said...

WTF?!?!?!??!?!?! HOW DID I NOT KNOW YOU WERE PREGNANT????? I feel like such a fool for being so far behind. Every time I caught your posts within the past few weeks it was a non-baby related post. Ugh, I'm so mad at myself for not knowing until now.

I hope you're feeling well. Weeks 5-16 were complete hell for me. It was like a 3 month hangover. Puke city.

Taylor said...

That sounds like me till you get to the part where you invested. What are some more pointers you may have for someone who is working hard, and learning lessons in business from others and by working on smaller scale projects already. With student loans ahead I wonder when the whole investing thing will ever be able to happen?

Wendy said...

Amen Sistah! Smart lady.:)

Rachel Del Grosso said...

It must be annoying and disheartening to hear people say that you must be a trust fund baby knowing just how much you have sacrificed and how hard you have had to work. Never let the naysayers get you down, girl.

Katy said...

I wouldn't buy a property unless I could hold it without a renter. But I'm a scaredy cat, since I have lots of kids to feed. I also have no personal debt (student loan or otherwise), so that makes a difference.
I think a lot depends on your personal situation. You've got to be willing to sleep on the floor of a mess of a house if it comes to that.
(Unless there are snakes. Then you just go sleep on a park bench.)

Ruth said...

What you have said is invaluable to both high school and college students and old women like me..:)..Self-education and hard work cannot be over-emphasized...Another point: I'm thinking that the trust fund question has as much to do with your gender, and your age..? It's a thought. (Great points by the way)..

Deb said...

I once had a nosy "friend" who asked me some pretty in depth questions about how I could afford to do/buy certain things. I told her that I wasn't supposed to tell anyone but I was a distant relative of the royal family, conceived in scandal and that they paid me a lot of money to keep quiet and so I had to work my ass off during the day and go to school at night just to keep up the "illusion" that I wasn't a secret heiress. Pretty sure she didn't believe me but it was fun ;)

aBroad said...

We have come across mannerless people through the years who ask personal questions and we never ever answer them truthfully or even seriously. My husband will either just pretend he didn't hear or he/we will give an outlandish answer, such as, how did we move to South America ... we will say a Government agency sent us .. that sort of thing ..
It is no ones business where your money comes from or where you spend it.
There is no need to be concerned about answering these questions, they have no right to be asking them.
Just stare at them next time. Don't say anything.
How does the belly feel these days :)

Taylor in TX said...

Hi,

I just found your blog for the first time last week. What a delight! I think we may have many similarities. I too grew up in the 80s and began investing in real estate about 7 years ago. I just started the remodel on my 6th property, a 1920s house that I will convert into a duplex.

Anyway, in my case, instead of asking if I have a trust fund, I get incredulous looks along with the comment, "So, YOU own this property?!?" Wow. Do you manage it yourself? Do you have other properties? And on down the line..."where do you get the money? Where do you find the time? How do you handle it all?"

And I try to explain, though I don't think folks understand: I work my butt off at my job during the day, and then my early mornings (plumbing supply stores open at 6:30!) nights, evenings, and weekends are spent hustling tenants, contractors, craigslist ads, wall flyers, leases, keys, MLS listings, repairs, mortgages, remodeling budgets, etc. It is a different way of life. It is not always pleasant, but I hope that it will give me the freedom - financial and timewise - that I dream about.

Anyway, thank you for the post.

Amanda- Hip House Girl said...

I think it's normal and healthy for close friends to ask about finances (at least it is for me and my friends). We can all learn and grow from each other, so if we're all adults and can generally leave jealousy behind, why hide that info?

What's offensive is when someone suggests that you're a trust-fund kid or otherwise implies that you arrived where you did in some sort of unfair manner. (And guess what? Even if someone IS a trust-fund kid, who cares? Let's just worry about our own lives. And I've known some really nice trust-fund kids!)

But I always like hearing how hard you've worked and how smart you've been and how much you've learned, because that's what I can relate to (or at least relate to aspiring to).

alfred lives here said...

Great advice, love love love your Top 20.... smart stuff!

Soso@RealEstateGoals said...

I have been following your blog for a while. Its very impressive. I have been doing this for a decade too but in a different country (South Africa). Now doing it full time. And yes, even here people think things are easier for some people. They want to have it all and have it now.

Anonymous said...

Good going.You deserve all your success! My mother was a trust fund baby and blew threw every last dime. It was hard to watch her frivilous spending on luxury items, but it was her money, inherited from her parents. I am 62 years old, self-employed, hard-working, and grateful for every opportunity. The precepts you describe above apply to any business. Thank you for your blog and for sharing with us.

Kasey at Thrifty Little Blog said...

Wow, I guess I'm just not creative enough to come up with stories like you having a trust fund because I just assumed that you worked hard and saved money :). Seriously, if they would read any part of your blog, they would have seen that you do know what you're doing with your houses and could have maybe used those smarts to make some money!

Janell @ Isabella and Max said...

So, there are no fast and easy ways to success? :)Janell

Tammy @ Type A said...

damn, so no drugs were involved? ;)