Home Real Estate Investment Patience is a Virtue in Real Estate Investing [Anno Darwinii 2.25]

Patience is a Virtue in Real Estate Investing [Anno Darwinii 2.25]

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In Anno Darwinii 2.25, I’ll show you the progress in our biggest renovations and discuss why patience is a virtue in real estate investing.

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The last three months have been transformative for both my personal life and the rental empire. I’ll touch on the personal stuff in the future, but this post today is all about what’s going on behind the scenes with our real estate portfolio.  

While waiting for three redevelopment projects at once, I’ve learned an important lesson: patience is a virtue in real estate investing.

Why Patience is a Virtue in Real Estate Investing

Your particular investment strategy may not need patience. For example, if you invest in the stock market as a day trader, your investment might need just a few morning hours every day to yield a profit. But successful real estate investors are going to need a little more patience to survive.

Most real estate transactions take place over a month or so. But to realize gains from buy and hold rental properties, you’ll need a longer term outlook. This can range from months to even years in some cases.

But it’s not necessarily a bad thing. In fact, the need for patience is one of my favorite features of the real estate industry. I think it separates the average investors from the successful investors.

Our experience in the last three months is a perfect example of this in action.

Below, I’ll highlight the properties that truly tested our mettle as patient investors: our two apartment buildings and the Palm Springs vacation home. 

Read the last episode of Anno Darwinii 2.0

Indy Apartment building #1: The 10 unit

The 10 Unit.  TheDarwinianDoctor.com

At our last update, we were finally starting to see some progress with this beautiful brick building. I’m happy to report that construction did accelerate over the last 3 months. While we are still behind schedule, my general contractor has made immense progress. Here’s a list of what’s been completed:

  • New kitchens and cabinetry
  • New bathrooms
  • Updated entryway and LVP flooring
  • New paint throughout
  • Updated electrical and lighting

Below is a before and after of a bathroom in one of the units. The transformation is pretty dramatic in the building. As you might recall, many of these units were completely gutted when I purchased the property.

This week my property manager is finally touring the property to plan for the photography and marketing of the finished units.  

I’m really hopeful that we can get some of the units rented before the weather turns cold and nasty for the winter. 

Indy Apartment building #2: The 7 unit

We picked up this property as a fully occupied 7 unit apartment building with an empty lot next door. Since purchase, about half of the tenants have turned over and we’ve started to lightly renovate the units. Our real estate agent (who’s also our property manager) has started to show the units upon completion.

We’ve kept the renovations mostly cosmetic, with some upgrades to the bathrooms, kitchens, and flooring. Here are a couple of photos from the facelift.

Most of the real estate I’ve purchased has come vacant, so this building was a new experience for us. To keep the building cash flowing, we decided not to encourage full tenant turnover straightaway. Instead, we are allowing their leases to terminate and for the tenants to seek different housing on their own.

As I mentioned above, more than half of the building is now vacant, which is allowing us to upgrade the units and hike up the rents to market.

I’m looking forward to refinancing the building in 2022 with a higher valuation. We’ve also started to think about some development opportunities for the empty lot next door.

Here are some options for this beautiful tree lined lot:

  1. Build a single family home to sell 
  2. Build a multifamily property to rent long term
  3. Build a property to rent short term
  4. Sell the empty lot

What do you think we should do with the lot? Comment below!

The Palm Springs Short Term Rental

Palm Springs House Front.  TheDarwinianDoctor.com

This beautiful 1940s house has been stuck in the planning period for the last few months. My wife and I have spent over a hundred hours on site visits, virtual meetings, and emails with our general contractor and designer. As a result of this, we’ve laid out what is going to be an incredible new look for the house.

On the inside, we’re opening up walls to increase the light between the living areas and the backyard. We’ll also be opening up the kitchen to the living room to create a great flow between these spaces.

And on the outside, we’re hoping to construct an outdoor Palm Springs paradise with a pool, spa, and lounging areas to enjoy the view of the San Jacinto mountains. Currently, the backyard is an overgrown and weedy blank canvas. But here are a few renderings of what we’re hoping it’ll look like with time:

Before this vision comes to life, we’ve got to dig a pool, pour a ton of concrete, and plants lots of vegetation.

Income projections

All three of these buildings are soaking up capital each month and are currently cash flow negative. But as renovations finish up and they become rentable, we expect these three properties to contribute about $100,000 of cash flow to our annual income.

And as I discussed recently, I’m also banking on a hefty tax refund from the short term rental as well

Conclusion

There are many ways to make a quick buck with investing. Even in real estate, you can make money fairly quickly as a wholesaler or agent. But I believe the better way to take advantage of real estate is to redevelop or improve property.

I’m a big fan of the BRRRR method, but I don’t consider this method essential for a long-term investor in real estate. You just need to know when it’s a reasonable time to enter the housing market, then have the right mix of patience plus time and/or money.

Picking the right property at the right time in a real estate market can be tough, but the good news is that you don’t have to find the perfect deal all the time. In fact, no deal or investment is ever perfect. But if you get it right most of the time, you’ll eventually become a great investor.

So when you’re caught in a lull of renovations or are having setbacks, don’t despair. Just remember: patience is a virtue in real estate investing.

–TDD

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11 comments

Financial Samurai September 27, 2021 - 7:29 am

Good luck on the Palm Springs house! How much did it cost? Hundreds of hours on the house sounds like a lot. You might have to include those hours in the cost?

Seeing before and after photos after remodeling it’s very satisfying indeed.

Sam

Reply
The Darwinian Doctor September 28, 2021 - 7:26 am

Hi Sam, the Palm Springs house was around $1.07 million and I expect to spend about $250-300k on the renovation. Hundreds of hours is a lot, but these hours unlock a big tax benefit likely worth > $100k in cash: Amazing Tax Deductions from Your Short Term Rental

Also, the hours spent on this project are also pretty satisfying. We’re seeing a beautiful vacation home come to life before our eyes. We intend to use it as a great getaway on the weekends sometime, so it’s really a dual purpose investment.

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The Multi-Family Mindset December 30, 2022 - 3:14 am

Absolutely Correct!! Thanks for sharing such a nice piece of information!! Loved it!!

Reply
Nishant Jayant January 8, 2023 - 7:33 pm

Hi there!

I was wondering what advice you have for managing remote renovations?

Reply
The Darwinian Doctor January 9, 2023 - 9:56 am

There’s a lot to this question, so I’ll put it on my short list of topics to answer in a full blog post!

Reply
Seth Parent April 17, 2023 - 4:28 am

Your experience with real estate investing is a valuable lesson for anyone looking to invest in this industry. Your patience and long-term outlook are admirable traits that set you apart from the average investor. It’s impressive to see the progress you’ve made with your apartment buildings and the Palm Springs vacation home. Your attention to detail and dedication to transforming these properties into something beautiful is inspiring.

Reply
The Darwinian Doctor April 17, 2023 - 8:32 am

Thanks!

Reply
Gerald Harris August 10, 2023 - 8:09 am

Great Article. Your remodeling skills are amazing. It’s interesting many people focus on the fix and flip aspect of real estate investing. The real beauty of real estate investing is patience and time. Thank you for this.

Reply
Rose Chandler September 1, 2023 - 4:23 am

Your journey in the real estate world is truly inspiring. It’s refreshing to see how patience is such a vital ingredient in your recipe for success. The progress you’ve made with your Indy apartment buildings and the Palm Springs rental is remarkable, and your attention to detail in the renovations is evident. The potential for $100,000 of annual cash flow from these properties is exciting and showcases the long-term benefits of real estate investing.

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Dr. Daniel Shin

Dr. Daniel Shin

I’m Dr. Daniel Shin, a surgeon, investor, and educator on a mission to fast-track your financial freedom. From a $300,000 debt to a diverse investment portfolio, I’m now just years away from financial independence. Ready to join me on this journey? Let’s go!

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