In the blood?
Bad investment 
God's country
"Paul, I'm considering a pretty significant real estate investment but I'm concerned about what the market will do."
“Well, all the experts say we’re in the 5th inning of a 9 inning game. So the prevailing wisdom is that you’ve got at least a few more years until you risk really being stung.”
“Yeah, I know what the so-called experts are saying, but I would like your advice.”
Good grief. I don’t have a crystal ball. And if I did, I certainly wouldn’t be spending my days stuck in an office rendering accounting, auditing, tax and investment advice. Instead, I’d be betting the ponies and squandering my winnings on various hunting and fishing adventures across North America. I wonder if this guy would be so insistent on paying me $280 an hour to speculate on real estate given my family’s history.
My grandfather was a railroader. He worked for Southern Pacific and didn’t spend a whole lot of time at home. I’m told he was a good man, though, and did his best to provide for his family. Soon after WWII ended and my father was just a nipper, his parents decided that a Russian missile attack was imminent. To safeguard his family, gramps decided that he needed a piece of property where his family could be entirely self-sufficient. Big enough for an orchard, alfalfa, vegetable garden, cows, chickens, pigs. But not so big that a couple of them couldn’t run it. A hundred acres or so ought to be just about right. But where to put this little farmstead? Gramps searched high and low. After a lot of searching, researching, examining, and anguish, the decision was narrowed to two locations – the Pacific Palisades or Lucerne Valley.
I’m told his reasoning went something like this:
“The Pacific Palisades has a nice view, but it might be a distraction and the last thing I need is my son standing around staring off into the ocean when he ought to be working. It’s awfully rocky, and it would probably take a year to just clear the rocks before you could plant anything. Sure it’s cool weather, but tomatoes thrive in a hot, sunny climate and I do love a good ‘mater. Besides, damp weather can cause real problems with the respiratory system.”
“Now, the Lucerne Valley is hot, but it’s a dry heat, and sweating is supposed to be therapeutic. And if a Russian sub decides to slip inside of Catalina Island and cook off one o’ them nook-ya-ler de-vices, we’d be sittin’ ducks there on the coastline. Sure, the land is a bit more expensive out there in the Lucerne Valley, but this is a long-term investment. I think my money is better spent on land with real potential. Land in God’s country. Land in Lucerne Valley.”
I suppose all those years sucking diesel fumes from locomotive engines knocked gramps off his nut. But I can’t fault him too much. I wouldn’t exactly call myself a great real estate clairvoyant, either.
In August of 1993, having just graduated from college with an accounting degree, I got a call from my friend Patrick. At one time Pat & I were dirt-biking buddies until one afternoon I was going faster than I ever went and then fell off, breaking various bones in the process. That put a very large period on my dirt-biking days, but our friendship continued for some years.
By trade, Pat was a custom appliance installer. He worked for a company that was contracted by major appliance retailers. If you bought a new dishwasher or some other appliance from Sears, Pat would come to your house and install it. Usually it was a slam-dunk pull-out-the-old-and-stick-in-the-new-unit process, other times it was true custom work that took a fair amount of fabrication. I worked with him frequently on the more difficult installs where he needed an extra set of hands or some extra muscle to get the job done. Occasionally a customer wanted a complete remodel - new stove, dishwasher, oven, the whole schnitzel. In that case, Pat and I would bring our friend Rod along with us. Rod was a pretty good finish carpenter and was a good compliment to our team.
Anyway, Pat called me one day with a business proposition. It seems that during his travels he had come across a little 3-bedroom house for sale. Structurally, the place was sound but the lawn was overgrown with rocks and weeds and it needed some moderate cosmetic work (paint, carpet, etc.). The residence had been owned by a hermit who croaked a couple years prior. The property was then put on the market where it sat for a good year with no interest. Pat’s Aunt Ginny was the real estate agent handling the property and she had it on good authority that the financier who held the note on the place was in a bind and just wanted to unload it. She told Pat that she had been instructed to accept any offers on the property above $60,000. Pat proposed that he, Rodney and I buy the place. With no money down and all closing costs included in the new loan, the monthly nut that each of us would have to cover amounted to about $280. The plan was to buy the place, rehab it, live in it for a little while, and sell it a couple years later when real estate values started to climb. I had mixed feelings. I told Pat that I would think it over and call him back the next day. Like any good accountant, I immediately went to work preparing a spreadsheet listing all positives and negatives, assigning a numerical value to each attribute based on its relative importance. When the analysis was complete, I compared the sum of the positives and negatives and reached a decision.
Positives:
Owning a house would help to cultivate the successful, playboy image I was putting out to the ladies. +15
Cool guys for roommates +10
Tax benefits from home ownership +5
Potential for return on investment. +5
Negatives:
Location – Tujunga – not only would this require a long commute, but Tujunga is the white trash/meth lab capital of Los Angeles County. -10
Derelict co-investors who would probably blow their share of the monthly mortgage payment on Coors Light and Slim Jims. -15
Potential for loss on investment -10
Time, energy, and $$ to rehab the place –5
I’m sure there were some other attributes but the above is a pretty good recollection of the original list. The bottom line: the negatives won out and my home ownership days were still far into the future. I called Pat the following day and told him to count me out of the deal. In an effort to change my mind, he ridiculed me unceasingly for a good hour until it became clear that I wasn’t going to budge. Eventually he resigned himself to a 50/50 ownership with Rod and they made the offer.
The deal was a slam-dunk and, after a 30 day escrow, Pat and Rod were the proud owners of their first home. On the day that the deal closed, Pat and I picked up the keys from Aunt Ginny and went over to the house. Upon opening the door, we noticed that the house was still packed with the hermit’s stuff. Pat was not a happy camper. He immediately called Aunt Ginny from his cell phone to find out what the heck was going on. Apparently the hermit had no relatives, no will, and nobody who wanted his belongings. Aunt Ginny told Pat to be cool for 10 days or so and she would take care of it. We locked up the place and hit the road. Two Fridays later we returned in the early morning hours with Rod, only to find that nothing had changed. Despite Aunt Ginny’s promise to empty the house, the place was still packed to the gills with hermit junk. Pat’s face turned bright red and I think I noticed smoke coming from Rod’s ears. I, on the other hand, stood smugly, feeling better & better about my decision to reject this investment opportunity. Aunt Ginny happened to call at that moment and was full of apologies. Due to a busy week, she was unable to have the stuff removed. She told Pat that they could keep whatever they wanted and sell the rest at a garage sale. In a very enthusiastic voice and with language I’m not comfortable repeating here, Pat told her he didn’t want any of the hermit’s stuff and it would be a cold day someplace that doesn’t get many cold days before he burned a weekend trying to hock this hooey at a garage sale. I think Aunt Ginny detected a hint of homicidal rage in Pat’s voice. She volunteered that she would personally pay for a dumpster to be delivered and would pay us $500 to relocate all the hermit’s stuff to the dumpster. This seemed to mollify Pat, at least enough that he stopped searching through the kitchen drawer for a knife with which he could slit Aunt Ginny’s throat. Later that day a giant blue dumpster was unloaded onto the driveway. While awaiting the dumpster’s arrival we managed to consume a significant number of Coors Lights and were in no condition to do any heavy lifting when it was finally delivered. We watched the hermit’s black & white t.v. (complete with tin foil balls on the ends of the rabbit ears) until the effects of the barley pops wore off and then drove home.
The next morning we were finally ready to purge the house of its offending contents. With bellies full of Winchell’s donuts, we dove into the work as though possessed. After a few hours the house was about ¾ empty when I carried a coffee table out the front door. Just as I hoisted the table over my head to pitch it into the bin, I noticed out of the corner of my eye, a yellowed letter size envelope fall from the bottom of it. I tossed the table into the dumpster, wiped the sweat from my brow and picked up the envelope. Scotch tape, its adhesive long dried and decayed, suspended from its edges. Inside the envelope were fifteen $20 bills, perfectly crisp. Date on the bills… 1977. Very strange. About then Pat emerged from the house with a cardboard box full of debris atop his shoulder.
“What are you doin’… you loafing?”
“Man, I was just tossing that coffee table and this envelope was taped to the bottom of it. There’s 300 bucks in it!”
“Hey, Rod! Get out here!”
We spent the next several minutes discussing my find. It eventually occurred to us that perhaps there was more hidden booty in the stuff we had already discarded. What had taken about four hours to load into the dumpster then took about 20 minutes to relocate to a pile on the front lawn. Various tools (hammers, Sawzalls, crowbars, etc.) were retrieved from our trucks and we began dismantling each item before returning the remaining debris to the bin. The spectacle of three guys emptying a dumpster that they had just been filling, demolishing various items, and occasionally shouting, “whoo-hoo!” was out of the ordinary… even for Tujunga. It didn’t take long before neighbors began to wander over. There were numerous questions.
“You guys the new owners or just the hired help?”
“You know, Mr. Mulford, the old guy that lived here sure was a mean ol’ s.o.b. He’s probably spinning in his grave watching you bust up his stuff. How come you’re breaking everything like that?”
“You tryin’ to get revenge on ol’ man Mulford? He’s dead, ya know.”
“What’s all the hollering and celebrating about?”
“You guys want any help with that?”
Eventually they became bored watching the three crazy men break things and wandered back to their homes to drink Mountain Dew and watch NASCAR. We continued our treasure hunt ultimately collecting a considerable sum. Some of the places that the old codger hid this money were quite strange. Booty was found in places that you might expect – inside of mattresses & cushions, behind pictures, taped to the bottom of drawers, in a shoebox in the attic (where a rat had chewed up several $50 bills to make a nest – there’s a Matthew 6:19 lesson in there, for sure). But we also discovered stashes in unlikely places. There was a roll of paper towels which had been unrolled and then re-rolled with $100 bills meticulously placed inside. There was a seemingly new bag of cat litter which had been opened with a razor blade, a plastic bag of $20 bills inserted, and then re-sealed with glue. There was an umbrella, its handle removed, and the tube filled with painstakingly rolled $10 bills. And countless other bizarre attempts to safeguard the hermit’s wealth. All of which he left behind when he took a dirt nap.
The total cash collected from our day’s work… brace yourself… $18,680. My share - $0. The guys were kind enough to cut me in 1/3 on the $500 payment from Aunt Ginny, though. Cheap sons o’ guns. Over the next four months Pat and Rod painted the inside and outside of the house, replaced the carpet, and planted a new lawn. Just when the lawn had reached cutting length a guy knocked on the door and asked if they were interested in selling. Seems his daughter and grandkids lived just down the street and he was moving from back east to be near them. If they were interested, he’d write a check for $85,000 and cover all the closing costs himself. Pat actually had the nerve to call me later that day.
“Hey Hoss, we’re selling the place and making a big profit. We’re going to invest the proceeds in another property. Do you want in on this one?”
“Let me see, I need to make a spreadsheet with the positives and negatives, assign a numerical value to each…”
“Yeah, get back to me on that.”
God's country
"Paul, I'm considering a pretty significant real estate investment but I'm concerned about what the market will do."
“Well, all the experts say we’re in the 5th inning of a 9 inning game. So the prevailing wisdom is that you’ve got at least a few more years until you risk really being stung.”
“Yeah, I know what the so-called experts are saying, but I would like your advice.”
Good grief. I don’t have a crystal ball. And if I did, I certainly wouldn’t be spending my days stuck in an office rendering accounting, auditing, tax and investment advice. Instead, I’d be betting the ponies and squandering my winnings on various hunting and fishing adventures across North America. I wonder if this guy would be so insistent on paying me $280 an hour to speculate on real estate given my family’s history.
My grandfather was a railroader. He worked for Southern Pacific and didn’t spend a whole lot of time at home. I’m told he was a good man, though, and did his best to provide for his family. Soon after WWII ended and my father was just a nipper, his parents decided that a Russian missile attack was imminent. To safeguard his family, gramps decided that he needed a piece of property where his family could be entirely self-sufficient. Big enough for an orchard, alfalfa, vegetable garden, cows, chickens, pigs. But not so big that a couple of them couldn’t run it. A hundred acres or so ought to be just about right. But where to put this little farmstead? Gramps searched high and low. After a lot of searching, researching, examining, and anguish, the decision was narrowed to two locations – the Pacific Palisades or Lucerne Valley.
I’m told his reasoning went something like this:
“The Pacific Palisades has a nice view, but it might be a distraction and the last thing I need is my son standing around staring off into the ocean when he ought to be working. It’s awfully rocky, and it would probably take a year to just clear the rocks before you could plant anything. Sure it’s cool weather, but tomatoes thrive in a hot, sunny climate and I do love a good ‘mater. Besides, damp weather can cause real problems with the respiratory system.”
“Now, the Lucerne Valley is hot, but it’s a dry heat, and sweating is supposed to be therapeutic. And if a Russian sub decides to slip inside of Catalina Island and cook off one o’ them nook-ya-ler de-vices, we’d be sittin’ ducks there on the coastline. Sure, the land is a bit more expensive out there in the Lucerne Valley, but this is a long-term investment. I think my money is better spent on land with real potential. Land in God’s country. Land in Lucerne Valley.”
I suppose all those years sucking diesel fumes from locomotive engines knocked gramps off his nut. But I can’t fault him too much. I wouldn’t exactly call myself a great real estate clairvoyant, either.
In August of 1993, having just graduated from college with an accounting degree, I got a call from my friend Patrick. At one time Pat & I were dirt-biking buddies until one afternoon I was going faster than I ever went and then fell off, breaking various bones in the process. That put a very large period on my dirt-biking days, but our friendship continued for some years.
By trade, Pat was a custom appliance installer. He worked for a company that was contracted by major appliance retailers. If you bought a new dishwasher or some other appliance from Sears, Pat would come to your house and install it. Usually it was a slam-dunk pull-out-the-old-and-stick-in-the-new-unit process, other times it was true custom work that took a fair amount of fabrication. I worked with him frequently on the more difficult installs where he needed an extra set of hands or some extra muscle to get the job done. Occasionally a customer wanted a complete remodel - new stove, dishwasher, oven, the whole schnitzel. In that case, Pat and I would bring our friend Rod along with us. Rod was a pretty good finish carpenter and was a good compliment to our team.
Anyway, Pat called me one day with a business proposition. It seems that during his travels he had come across a little 3-bedroom house for sale. Structurally, the place was sound but the lawn was overgrown with rocks and weeds and it needed some moderate cosmetic work (paint, carpet, etc.). The residence had been owned by a hermit who croaked a couple years prior. The property was then put on the market where it sat for a good year with no interest. Pat’s Aunt Ginny was the real estate agent handling the property and she had it on good authority that the financier who held the note on the place was in a bind and just wanted to unload it. She told Pat that she had been instructed to accept any offers on the property above $60,000. Pat proposed that he, Rodney and I buy the place. With no money down and all closing costs included in the new loan, the monthly nut that each of us would have to cover amounted to about $280. The plan was to buy the place, rehab it, live in it for a little while, and sell it a couple years later when real estate values started to climb. I had mixed feelings. I told Pat that I would think it over and call him back the next day. Like any good accountant, I immediately went to work preparing a spreadsheet listing all positives and negatives, assigning a numerical value to each attribute based on its relative importance. When the analysis was complete, I compared the sum of the positives and negatives and reached a decision.
Positives:
Owning a house would help to cultivate the successful, playboy image I was putting out to the ladies. +15
Cool guys for roommates +10
Tax benefits from home ownership +5
Potential for return on investment. +5
Negatives:
Location – Tujunga – not only would this require a long commute, but Tujunga is the white trash/meth lab capital of Los Angeles County. -10
Derelict co-investors who would probably blow their share of the monthly mortgage payment on Coors Light and Slim Jims. -15
Potential for loss on investment -10
Time, energy, and $$ to rehab the place –5
I’m sure there were some other attributes but the above is a pretty good recollection of the original list. The bottom line: the negatives won out and my home ownership days were still far into the future. I called Pat the following day and told him to count me out of the deal. In an effort to change my mind, he ridiculed me unceasingly for a good hour until it became clear that I wasn’t going to budge. Eventually he resigned himself to a 50/50 ownership with Rod and they made the offer.
The deal was a slam-dunk and, after a 30 day escrow, Pat and Rod were the proud owners of their first home. On the day that the deal closed, Pat and I picked up the keys from Aunt Ginny and went over to the house. Upon opening the door, we noticed that the house was still packed with the hermit’s stuff. Pat was not a happy camper. He immediately called Aunt Ginny from his cell phone to find out what the heck was going on. Apparently the hermit had no relatives, no will, and nobody who wanted his belongings. Aunt Ginny told Pat to be cool for 10 days or so and she would take care of it. We locked up the place and hit the road. Two Fridays later we returned in the early morning hours with Rod, only to find that nothing had changed. Despite Aunt Ginny’s promise to empty the house, the place was still packed to the gills with hermit junk. Pat’s face turned bright red and I think I noticed smoke coming from Rod’s ears. I, on the other hand, stood smugly, feeling better & better about my decision to reject this investment opportunity. Aunt Ginny happened to call at that moment and was full of apologies. Due to a busy week, she was unable to have the stuff removed. She told Pat that they could keep whatever they wanted and sell the rest at a garage sale. In a very enthusiastic voice and with language I’m not comfortable repeating here, Pat told her he didn’t want any of the hermit’s stuff and it would be a cold day someplace that doesn’t get many cold days before he burned a weekend trying to hock this hooey at a garage sale. I think Aunt Ginny detected a hint of homicidal rage in Pat’s voice. She volunteered that she would personally pay for a dumpster to be delivered and would pay us $500 to relocate all the hermit’s stuff to the dumpster. This seemed to mollify Pat, at least enough that he stopped searching through the kitchen drawer for a knife with which he could slit Aunt Ginny’s throat. Later that day a giant blue dumpster was unloaded onto the driveway. While awaiting the dumpster’s arrival we managed to consume a significant number of Coors Lights and were in no condition to do any heavy lifting when it was finally delivered. We watched the hermit’s black & white t.v. (complete with tin foil balls on the ends of the rabbit ears) until the effects of the barley pops wore off and then drove home.
The next morning we were finally ready to purge the house of its offending contents. With bellies full of Winchell’s donuts, we dove into the work as though possessed. After a few hours the house was about ¾ empty when I carried a coffee table out the front door. Just as I hoisted the table over my head to pitch it into the bin, I noticed out of the corner of my eye, a yellowed letter size envelope fall from the bottom of it. I tossed the table into the dumpster, wiped the sweat from my brow and picked up the envelope. Scotch tape, its adhesive long dried and decayed, suspended from its edges. Inside the envelope were fifteen $20 bills, perfectly crisp. Date on the bills… 1977. Very strange. About then Pat emerged from the house with a cardboard box full of debris atop his shoulder.
“What are you doin’… you loafing?”
“Man, I was just tossing that coffee table and this envelope was taped to the bottom of it. There’s 300 bucks in it!”
“Hey, Rod! Get out here!”
We spent the next several minutes discussing my find. It eventually occurred to us that perhaps there was more hidden booty in the stuff we had already discarded. What had taken about four hours to load into the dumpster then took about 20 minutes to relocate to a pile on the front lawn. Various tools (hammers, Sawzalls, crowbars, etc.) were retrieved from our trucks and we began dismantling each item before returning the remaining debris to the bin. The spectacle of three guys emptying a dumpster that they had just been filling, demolishing various items, and occasionally shouting, “whoo-hoo!” was out of the ordinary… even for Tujunga. It didn’t take long before neighbors began to wander over. There were numerous questions.
“You guys the new owners or just the hired help?”
“You know, Mr. Mulford, the old guy that lived here sure was a mean ol’ s.o.b. He’s probably spinning in his grave watching you bust up his stuff. How come you’re breaking everything like that?”
“You tryin’ to get revenge on ol’ man Mulford? He’s dead, ya know.”
“What’s all the hollering and celebrating about?”
“You guys want any help with that?”
Eventually they became bored watching the three crazy men break things and wandered back to their homes to drink Mountain Dew and watch NASCAR. We continued our treasure hunt ultimately collecting a considerable sum. Some of the places that the old codger hid this money were quite strange. Booty was found in places that you might expect – inside of mattresses & cushions, behind pictures, taped to the bottom of drawers, in a shoebox in the attic (where a rat had chewed up several $50 bills to make a nest – there’s a Matthew 6:19 lesson in there, for sure). But we also discovered stashes in unlikely places. There was a roll of paper towels which had been unrolled and then re-rolled with $100 bills meticulously placed inside. There was a seemingly new bag of cat litter which had been opened with a razor blade, a plastic bag of $20 bills inserted, and then re-sealed with glue. There was an umbrella, its handle removed, and the tube filled with painstakingly rolled $10 bills. And countless other bizarre attempts to safeguard the hermit’s wealth. All of which he left behind when he took a dirt nap.
The total cash collected from our day’s work… brace yourself… $18,680. My share - $0. The guys were kind enough to cut me in 1/3 on the $500 payment from Aunt Ginny, though. Cheap sons o’ guns. Over the next four months Pat and Rod painted the inside and outside of the house, replaced the carpet, and planted a new lawn. Just when the lawn had reached cutting length a guy knocked on the door and asked if they were interested in selling. Seems his daughter and grandkids lived just down the street and he was moving from back east to be near them. If they were interested, he’d write a check for $85,000 and cover all the closing costs himself. Pat actually had the nerve to call me later that day.
“Hey Hoss, we’re selling the place and making a big profit. We’re going to invest the proceeds in another property. Do you want in on this one?”
“Let me see, I need to make a spreadsheet with the positives and negatives, assign a numerical value to each…”
“Yeah, get back to me on that.”
posted by willhuntforfood at 12:31 PM
2 Comments:
Paul - I swear to you now that if you don't write a book in the next fifteen years, I am going to come over to your house and punch you in the face. Every time I read something you wrote, my belly hurts from laughing so hard. You gotta stop giving this stuff away for free man. Fifteen years from today is June 23, 2020. It will be a Tuesday. You have until then. Otherwise - and I'm completely serious about this - you will receive a sudden blow to the face from either my left or my right hand. I realize that you will probably pound the living snot out of me if it comes to this, but you leave me no other choice. You may begin.
What a wild story!!!
Post a Comment
<< Home