He also became adept and mas- tering the art of adding bedrooms to every weird nook and cranny of a house one could imagine. Bill bought his first house in Eugene, Oregon in 1989 and by 2006 had amassed almost 300 units. At this time, Andrew was graduating from the University of Oregon having heard from his dad how lucrative real estate investing can be for the previous 22 years. LIKE FATHER LIKE SON(S) In 2006, Bill started an internship for university students interested in real estate investment and brought several of them on after they grad- uated to become full time investors. Andrew took the lead on this project (Phillip was just entering college). The whole thing was going well until a minor market fluctuation in 2008 happened that some of the readers may be familiar with. After some rough waters, they were able to get their bearings and start flip - ping houses. The team fell into the niche of buying short sales (properties a bank takes less than the full mortgage in payment in order to sell) but this niche started to grind to a halt in 2010 when, almost simultaneously, banks became stingier on how big a discount they would accept and the First Time Home Buyer Tax Credit expired. All of a sudden, it was much harder to buy such properties and much harder to sell them. Bill and Andrew began looking for a new niche and it happened to be over a thousand miles away. The two took a trip out to Kansas City with a friend who had been investing out-of-state and found the idea of opening a new branch in the Mid- west irresistibile. Both wanted to get back into buy and hold and away from flipping. Buy and hold was their
bread and butter. And Kansas City appeared to be a solid market with a diverse economy and steadily grow- ing population where the prices were substantially less than Oregon while the rents were only somewhat less. In other words, buy and hold real estate cash flows much better in Missouri than Oregon. KANSAS CITY, HERE I COME Andrew arrived in Kansas City on January 4, 2011, a few days after his beloved Oregon Ducks had lost a heartbreaking national champi- onship to Auburn. Three days later there was a blizzard where the tem- perature bottomed out at negative two degrees. “Perhaps this wasn’t meant to be” passed unspoken through his head. But he soldiered on and the weath- er improved. (Kansas City is great in the Fall and Spring, not so much in the Winter and Summer.) They opened up Stewardship Investments,
LLC as a subsidiary of Stewardship Properties (Stewardship Properties, LLC in Missouri had already been taken) and purchased an office. As with any new venture, they started on a shoestring budget. Andrew lived in the basement of the office while scouting out poten - tial new investments; particularly apartments, which the plan was to focus on. Several of these early ones turned out to be duds, unfortunately. Like many investors who come from the coast and look in the Mid- west, the low prices looked too good to be true. Turns out, they were. Several of the early properties they bought in bad neighborhoods where the cash flow and cap rate look great on paper, but only on paper. These generally turned out to be manage- ment headaches and money pits. Fortunately, they soon learned the error of their ways. It’s possible to make money in rough areas, but only as a specialist. And Bill and Andrew weren’t such specialists.
38 | think realty magazine :: august 2021
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