August 17, 2009
Ipods & Cell phones? Not For My Son
Part of our business involves the buying and selling of REO properties, or real-estate owned by banks, mortgage companies, and other investors whose loans went bad and foreclosure resulted. My brother-in-law was in town this weekend, and I was showing him some of the things we do in our business, and the absolutely shocking prospects available in certain parts of the country.
Specifically, I was showing him a website of an asset manager that lists all the REO properties they have for sale. We reviewed several single-family houses in Detroit, MI that were listed for less than $1,000. As someone who has lived his entire life in the northwest, my brother-in-law couldn't fathom being able to buy a house for as little as $500.
My oldest son peeked into my office and heard us talking about some of the properties. When he heard the price points, he excitedly asked me, "Dad, can I buy a house?" Now, the businessman in me wanted to believe he wanted to buy a house as an investment and manage it like most real estate investors would. My proud moment was cut short, however, when he explained that we could use it as a second home and vacation there when the weather was nice.
In the nicest possible way, I told him that these properties were likely trashed inside, and the neighborhoods were likely overrun with squatters, drug problems, and violence. "Yeah, Dad, but for 500 bucks..." was his reply.
Let the record show that we will not be purchasing a vacation home in Detroit anytime soon. However, I am thankful for the opportunity to share with my son what I do for a living. I explained how some investors will buy these properties for very little money, do the necessary work to make them habitable, then either sell or rent the property to a family in need of housing. He understood that not only was there a way to make money in the transaction, but also a way to provide a lower income family a housing option other than government subsidized projects.
As I discussed my line of work with my brother-in-law, my son asked if he could review some of the properties on the asset management site. He played around with it for 15 minutes or so, and by the time he was done he had found us several 'potential' second homes in several hard-hit cities across the country. I do appreciate his excitement and his interest, and hope to cultivate it so that one day he can have his own portfolio of real estate investments. Besides, who knows when (if ever again) someone will be able to choose from literally thousands of houses for less than the cost of a high-end video gaming system?
At age 12, my son's interests are in engineering and architecture. If he has any desire to follow in his dad's footsteps from a career perspective, he hasn't let it be made known to me yet. Even if he doesn't get into real estate and buying notes, he could still maintain a portfolio on the side. I'm happy to help him get there, and give him a good start on building a retirement portfolio while most kids are still trying to talk their parents into the newest iPhone.
Make it a great week,
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