R E N T A L READER
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DECEMBER 2019
THE ‘RECOVERY SHOT’
A Good Purchase After a Bad One and the Lessons Learned
If you read last month’s newsletter, you learned about my very first real estate investment purchase and how badly it went. Sometimes I feel like I am still licking my wounds, even though we worked out the problems and it generates very good cash flow now. Yes, as I shared, the lessons learned were great, and I think I am a better property manager because of it, but who wants to go through that pain? I certainly didn’t (and don’t). In friendly games of golf, you can often take a “mulligan,” an extra stroke after a poor shot that you don’t count on the scoreboard. In essence, it is a do-over. While a do-over is not possible in real estate (you bought it, so you own it), the second-best thing is a great “recovery shot.”My second real estate purchase was truly a recovery shot, and thank goodness for it. I expect we would not have kept investing like we have if we didn’t buy the second one. It was a three-family unit that was being sold by a bank after a foreclosure. While only 2 blocks away from the first property we bought, it was in a much better area, the units were all bigger with better layouts, and it had good off-street parking. With an offer above the asking price (uncommon at the time, but we felt it was worth it), we beat out multiple other investors who also bid on the property. After much financial maneuvering and acrobatics (e.g., hard money loans, cross- collateralizing properties, private money loans, etc.), we closed on the property and got to work. I could bore you with the details of the differences between the property and what we did to make the property operate well, but instead, let me focus on what I took away from that process and have implemented into all future purchases. You see, financial spreadsheets are make-believe. They are really good at capturing and modeling the hard costs (e.g., taxes, insurance, rental rates, and management fees). But they are not good when it comes to what really determines if an investment is a winner or a loser — the “hidden” costs. • Vacancy — How long is the property going to be vacant between tenancies? Yes, the proactivity of your leasing team influences this, but the property, price, and condition influence it heavily, as well. • Turnover costs — How often do tenants turn over, and how extensive is the required make-ready between tenants? Property management influences the It really comes down to one thing: The game is won or lost on the “hidden” costs.
length of time between tenants and extent of make-ready, but property, price, and condition do, as well. Bad debts — In essence, these are collection problems. Please note that not all properties are created equal. We have managed properties where we would be happy to see a
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580 credit score, and we manage properties where anything below 700 won’t do. The property, price, and condition matter more to the quality of tenant than anything your leasing agent does for you on this category. • Maintenance costs —Some properties need to be repairedmore than others and some more extensively than others. Sometimes that is related to age, but it has more to do with the tenants you put into the property and the property itself. All of my purchases since this three-family unit have been focused on solid properties that will rent fast at slightly above-average market rents, that can keep solid tenants, and that are lighter maintenance. This has been the consistent thread in all of our purchases and has made all the difference.
While sometimes I get lured by what’s on the spreadsheet, I know firmly that what matters most is what’s not on there. Thank goodness I learned that on property No. 2.
Yours in awe of the recovery shot,
P.S. Not surprisingly, we at Robert C. White & Company are quasi-fanatical about the hidden costs. We know how much they matter, so we are very focused on vacancy, turnover, collections, etc. P.P.S. If you are interested in talking more about opportunities for investing in real estate in central Connecticut, let me know. I’m still buying, and I think we are in an interesting place with the market.
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MORE THAN JUST ‘YOU’LL SHOOT YOUR EYE OUT!’ Lessons Families Can Learn From ‘A Christmas Story’
In 1983, one movie introduced Red Ryder BB guns, fishnet-clad leg lamps, and bright red bars of soap into America’s everlasting Christmas mythos. Now, over 35 years later, “A Christmas Story” continues to delight audiences every holiday season with timeless lessons for viewers of all ages. In a story where kids are clever and kind, and parents are bumbling and wise, “A Christmas Story” has more lessons to offer families than just, “You’ll shoot your eye out!” Your kids are listening to you (oh, fudge!). They aren’t always obedient, but that doesn’t mean they’re not listening. After Ralphie lets slip the “queen mother of dirty words” in front of his father, the narrator reminisces about first hearing that word from his old man — possibly when he was trying to get their furnace to work. He doesn’t admit this to his mother, but it’s a lesson for parents everywhere that kids may hear more than they let on. Kids won’t believe in magic forever. Magical stories about Santa or even “Little Orphan Annie’s” Secret Society fill children’s hearts with wonder but won’t enchant them forever. Belief in certain parts of the Christmas season can fade slowly or die as quickly as the spin of a decoder pin, but parents can always be there to remind children about what’s really important during the Christmas season.
YURT SWEET YURT Glamping in Beautiful Locations
The allure of the great outdoors calls to many, but pitching a tent and cooking over a fire isn’t for everyone. If that describes you, consider the yurt: a small, permanent structure often outfitted with electricity, plumbing, and other modern amenities. Expertly nestled in remote locations, they provide comforts of home in the midst of nature. Here are just a few around the United States available for rent.
Treebones Resort, California
For those new to the glamping scene, this is a great choice for an easy transition. With picturesque views of the Pacific Ocean, the Treebones Resort in Big Sur has an array of spaciously comfortable yurts to choose from. The resort has heated pools, a cozy lodge, and even a sushi bar. About an hour up the coastline, you can find a few shops, restaurants, and art galleries if you decide you’ve gotten your dose of nature for the day.
Sometimes ‘disasters’ lead to new adventures.
Spruce Hole Yurt, Colorado
Christmas Day can be hectic, and, in the hubbub of it all, sometimes disaster can feel inevitable. Ralphie’s parents certainly experience their fair share of disaster in hilarious fashion when the Bumpus Hounds destroy their holiday turkey and leave nothing but the heavenly aroma. But, when Ralphie’s father takes them out to eat at a local Chinese restaurant, it creates a whole new Christmas tradition for the Parker family. Our holiday mishaps, no matter how tragic, are rarely the end of the world.
Nestled in the San Juan Mountains about 10 miles north of New Mexico, this yurt is a snow-lover’s paradise. Skiing, snowshoeing, and hiking trails are plentiful in this backcountry location. At the end of a chilly day, come home to comfy beds, cooking supplies, and decor made to feel like you’re camping — but with sturdy walls to keep out the cold.
Falls Brook Yurts, NewYork
For the glampers who truly want to get away, hike just under 1 mile into the woods of the Adirondack Mountains to discover rustic yurts beckoning you to cook over a fire or bundle up with a book. At night, the yurt’s domed skylight offers excellent stargazing. For those keen on winter activities, skiing and snowshoeing trails start right outside the front door. In the summer, enjoy hiking, fishing, and swimming.
Consider one final tip: Do not stick your tongue to any flagpoles this winter! Happy holidays!
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WHAT ABOUT DUNDER AND BLIXEM? The Strange History of Santa’s Reindeer
We all know reindeer visit our rooftops every Christmas Eve, but what brings them there? Follow the unique and complicated history of Santa’s reindeer to find out.
as Santa’s companions. In the late 1890s, the Sami natives of Northern Europe, who were longtime reindeer herders, made their
A visit fromwho on what night? In the 1820s, Clement Clarke Moore penned a holiday poem that became the foundation for a phenomenon still alive today. Commonly known as “‘Twas the Night Before Christmas,”“A Visit From St. Nicholas” is a beloved story shared by every generation. It is in this poem that reindeer were first credited with powering Santa’s sleigh around the globe. Many popular songs, movies, and plays have preserved Moore’s vision of St. Nick, and his reindeer and their names are no exception. (Well, kind of.) Rudolph wouldn’t join the squad until a department store added him as part of their promotions in the 1930s. What’s in a name? Dasher, Dancer, Prancer, Vixen, Comet, and Cupid were all brought to life by Moore, but have you ever heard of Dunder and Blixem? Though we now know the duo as Donner and Blitzen, Moore originally named themDunder and Blixem— the Dutch words for thunder and lightning—but publishing companies wanted names that would rhyme better with the rest of the poem. Still, it was a few decades before Donner and Blitzen made their appearances in the version of the poemwe know today. Reindeer burgers, anyone? Moore’s poem paved the way for Santa’s most famous form of transportation, but it was actually Carl Lomen, an Alaskan businessman, who mass-marketed reindeer
passage from Norway to the U.S. with a herd of reindeer to invigorate the Alaskan landscape and help their native neighbors. Lomen saw the reindeer as an opportunity and partnered with the Macy’s department store
company to create a promotional Christmas parade in which Santa, led by his reindeer, a sleigh, and Sami herders, were prominently featured. Lomen’s goal was to promote his massive reindeer conglomerate for the production and sale of reindeer meat. Instead, a holiday story was born.
CLASSIC ROAST CHICKEN
TAKE A BREAK
Inspired by Ina Garten
Ingredients
Directions
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1 chicken, approx. 5–6 lbs
1.
Heat oven to 425 F.
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Kosher salt
2.
Rinse chicken inside and out, removing giblets if included. Move to a work surface, pat dry, and liberally season with salt and pepper. Stuff cavity with thyme bunch, lemon halves, and garlic head. Brush outside with butter, and then season again. Tie chicken legs together with kitchen string. Meanwhile, in a roasting pan, toss onions and carrots in olive oil and season with salt, pepper, and 20 sprigs of thyme. Place the chicken on the vegetables and roast for 1 1/2 hours. Remove from oven, and let stand for 20 minutes covered with foil.
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Freshly ground pepper
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1 large bunch fresh thyme, 20 sprigs removed
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1 lemon, halved
3.
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1 head garlic, cut in half crosswise
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2 tbsp unsalted butter, melted
4.
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1 large yellow onion, thickly sliced 4 carrots, peeled and cut into 2-inch pieces
5.
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Solution on Page 4
6.
Slice and serve with the vegetables.
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Olive oil
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INSIDE 1 The ‘Recovery Shot’
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Yurts: Glamping at Its Finest Lessons Families Can Learn From ‘A Christmas Story’ How Santa Claus Became Powered by Reindeer Classic Roast Chicken
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Peyo the Therapy Horse
HORSING AROUND Meet a Different Kind of Therapy Animal
Horses have been loyal and useful companions to humans for centuries. But unbeknownst to many who fear these long-legged, 1,000-plus- pound mammals, horses are also naturally intuitive and extremely sensitive to the moods of people around them. These traits make them excellent therapy animals for those with autism, cerebral palsy, chronic illnesses, and PTSD, among many more. In fact, there are dedicated horse- riding camps geared toward chronically ill children and adults all over the world. However, riding horses isn’t the only way to benefit from equine therapy; horses are also fantastic comfort animals
Meet Peyo, the 14-year-old “love stallion” from Dijon, France, who is cheering up chronically ill patients one nuzzle at a time. This accomplished artistic dressage competitor accompanies his owner, Hassen Bouchakour, on visits to hospitals and nursing homes, bringing joy with every clop of his hooves. Patients suffering from all manner of ailments blossom when Peyo comes to visit, laughing and smiling while being nudged by his soft nose. He seems to have a keen sense for patients who are truly suffering, and though his handler is always nearby, Peyo often chooses which rooms to enter of his own volition. Having a horse in a hospital room may not sound very sanitary, but Peyo goes through a strict grooming regimen to be deemed hygienic enough to be around patients. His hooves are greased, his mane and tail are braided, and his entire body is rubbed down with antibacterial lotion before being covered by a blanket. Before Peyo became a therapy horse, he was almost put up for sale by Bouchakour, who had a hard time wrangling Peyo’s fiery personality. But, over time, when they traveled to shows and competitions together, Bouchakour noticed the horse was drawn to the injured and disabled and would instantly calm at their touch. “It is one of the most pure, honest, and sweet things,” Bouchakour says. “They like each other very much without asking for anything else.”
that can relieve anxiety and promote a positive environment for bedridden patients — as long as the doorway is big enough.
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