SUCCESS STORY: Steve O

I did not have an understanding of what was needed to succeed for most of my life. The eye-opener for me was a subordinate at work. About 11 years ago, I was sitting down with him to talk about how to improve his work performance. He mentioned to me that he would quit if I took the fun out of his job.

The conversation quickly changed.

It turned out that he owned some apartment buildings and did not need his work income. I asked him numerous times over the next few months about how to get started. His answer was always the same, "Just go buy them". Not helpful but I got the idea.

I went to the local bookstore and purchased the book "How to Buy and Sell Apartment Buildings". It was full of all the information that I needed to get started. I would go home from work and work understanding demographics, pulling census data, digging deep into all the financials associated with apartments.

In 1997, I pulled the trigger!

My early life was not one that had any kind of direction. Our family moved a lot and I went to many different schools. My parents divorced when I was early in high school and our family was delegated to the welfare roles. My mother had fairly severe mental conditions and had no idea what any of children were doing. I ran wild and left high school after the 10th grade.

The future seemed so clear to me. I joined the Marines at the age of 17 which my parents were happy to sign for. My thoughts were focused on a big career in construction when I got out. The $6/hour on a jack hammer sounded good to me.

I did get a job as a landscaper and after a failed run at starting my own company, switched to plumbing. It seemed like a decent car was always out of my reach so I took a job as a mechanic in order to learn how to keep my own vehicle running.

I was married at the age of 19 and had my first daughter shortly after. My mother-in-law worked at Hewlett-Packard and helped land me a job in the assembly department on the graveyard shift. The pay was half of what I made in construction but I viewed it as a better future. I started an education in the technical field so I could work up the ladder.

I eventually landed a job as a technician in the research and development department and then moved on to management. After 16 years of service at HP, my eyes were opened.

I still did my job but no longer put in extra hours. Nor did I give work my full attention anymore. I would get home and work on my plan for hours.

The plan was simple enough; determine the location that fit the criteria as outlined in the book that was poised for appreciation. I concluded at the time that my location in San Diego fit the profile!

My quest was frequently tempered as most of the agents that I talked to said that I wasn't ready. Lack of funds will give that impression.

I found an agent that said she wanted to work in the apartment field but had no experience. She offered that we could learn together.

I got a long list of 3-8 unit buildings together and ran all around the city looking. I found a nice 5 unit that was walking distance from the beach with an ocean view. My wife (now ex), would not come on board with the purchase and I had to let it go. I told her soon after that I was going to invest with, or without her. Soon after, I found a 4-plex in Carlsbad, CA. that fit my criteria. After a lengthy negotiation I purchased it for 180K with a 10% seller carryback on a note. In order to get the money I had to max out a credit line, and take a 3rd mortgage on my house.

Within a year I refinanced and paid off the credit line and 3rd. So I was basically had all my initial investment back. At year 2, I sold the property and exchanged it into another property with some other investors. I had 30% of a 46 unit property in Riverside, CA.

It was at this time that the plan for exiting my job came in to view. The plan was centered around how much money was needed to live on. The stock market was fairly high at this time and I had some money in my retirement account. I got a 21 unit property under contract in Palm Springs but needed to cash out my retirement to get it.

It only took 2.5 years of investing in apartments for me to exit my job for good. What a day that was. I walked in and looked at my BOSS and asked "How much time do you need to replace me?". I stayed around until one week before the apartment deal closed.

I was now spending my days doing whatever was desired. My wife was still resistant to the whole idea but decided she wanted to quit her job too. We lived near the beach but decided to sell the home and move to Arizona. It was the only way we could reduce the expenses to a livable level.

I spent the next few years wheeling and dealing and refining my process. One of the biggest changes that I made was to start buying poor perfoming assets to get a better deal. This would frequently put us into negative cashflow situations although the networth was rising rapidly. All of this proved to be too much for my wife and we parted company. Although she had an extreme distaste for the apartments, she was happy to take half of them.

My process is still very similar in that I look for locations that are set to have improving apartment fundamentals and still look for the mismanaged properties. With the help of some great connections and aggresive moves on my part, I now have over 600 units. Each of my buildings are over 100 units in size as I feel that is the way to have some efficiency in management.

For many years, I would hire managers to work on the properties. This was a difficult undertaking and absorbed too much time. I now use professional management for everything and my quality of life has improved as a result. It has also allowed me to focus on the purchase and disposition side of the business.

I am married again and my wife is a real estate contract attorney. We actually work together on deals at this point. It really helps to have a supportive spouse that is in allignment with your objectives.

My networth is approaching the big 10M. Most of the cashflow still ends up back into new deals (it is a disease ).

I have been on RE forums for a number of years giving advice freely. My objectives are not as noble as that sounds though. I have made many connections as a result and have helped myself and others to profit nicely. It is a good trade off for me. I have recently begun putting investor money into deals with a strong team of professionals at the helm. It is a great opportunity to leverage off of years of experience.

In summary, It took a lot of years to get on the right road. I wish that I had started a lot sooner. The saving grace was having a plan and process for success. I am sometimes amazed with the slowlane approach that many people take without looking deep into the future, especially with all the information that is before them. Or, the fact that they are willing to settle for retirement with a few houses to rent. Planning....

Steve, I think you suffer from a great disease and you totally deserve to do the happy dance.

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"Life shrinks or expands in proportion to one's courage" - Anais Nin

Steve,

You are the man.

I remember hearing you tell this story when I met you a year and a half ago. Still a great story.

I wanna go golfing with you and Kenric when I get back out to AZ.

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http://snowbank23.blogspot.com/

Awesome story from the world of real estate. Thanks Steve!!

It's great to hear about another successful investor who started off with much less than they now have. I can't wait to get on that same road to success that you took!

Great story, Steve. Thanks for sharing.

Continued success.

You still haven't let this go yet...

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My blog - Live Learn Invest

I think it was "the one that got away" =)

Thank you for sharing your story Steve

thanks for the story !!

Steve

Your story was a huge inspiration to me when I first heard it

- thank you! The power of what you showed us in AZ is just amazing...

Next time I'm in AZ, I'll buy you a beer. or some flap jacks

I love beer.... and flap jacks....

Thanks

Great success story Steve. Thanks for sharing...

Michael

Steve

Thanks for the story. I am the age you were when you started and I am now trying to get into the Biz myself. Been working hard at it. I currently have a property That I know can make money. I am just having trouble getting the cash to buy and rehab. but it has not stopped me yet and I will keep going after reading what you and MJ and Cantwait2 all had to say. I will keep pushing myself no mater what people are saying. I do not want to just go get another JOB(Just Over Broke). I am an intellegent person I feel. I have a masters degree and should be able to get it together to buy this property. When I do I know I will not be far behind you and be able to post my own success story. I just need to get that first one under my belt.

I visit AZ once in a while. I have family out there. Maybe when I come out I can meet some of you. Might be in Nov. for the Nascar race.

Thanks again
Talmadge

Thanks TNT,

There are a few of us out here that hang out on occasion. Drop me a line when you come out.

I'm in NM. Maybe we should start planning the first annual Fastlane beer and pancake breakfast meeting!

oooh . . .

Given what happened this year, I wasn't all that excited about going back to RD HQ for a get together.

But a Fastlane Beer and Pancakes Breakfast?

I'm all over that!

-Russ H.

PS Lots of fastlane members are in the Phx area (Biophase, ErinM, PhxMJ, SteveO, to name the ones that come to mind)

PPS MJ, You realize that if we did this, we would kinda want to see that orange colored monster you keep in your garage, right?

PPPS (OK, I'll stop): Phoenix would seem to make sense, but if you guys ever wanted to drink wine w/pancakes, I know a place in the Napa Valley where we can get free meeting space. And you all could see our rehab projects, and how we've done them.

I think I started something here....Sounds like fun to me...........

TJ

Russ: bflbob, Laurie_Delk and I discussed the same thing when we met over here in DC last month. I haven't been to Napa Valley yet, so that sounds like a great place to meet. Besides, we still have to finish that Cashflow game we started in Scottsdale last March.

MJ, what if we make it coincide with your book release and meet in Scottsdale?

So, who is going to start the thread for the get together?

OK, Enough hijacking of this thread. SteveO, thanks for posting. I don't get tired of reading about your experiences in the multifamilies world, and also those others about multiple fights, lol.

I'd heard bits and pieces from you over the years Steve, but it was cool to see it all written down in 1 place. I couldn't agree more of the importance of having a supportive partner. It can feel like you're spinning your wheels if you are spending so much time trying to find the deals, and then you have to spend an equal amount of time selling your partner on them. Talk about counterproductive

- Hakrjak