Tag Archives: Real Estate

How many times have you blown $1,000?

Ever wondered how many times in your life you’ve blown $1,000?

$1,000 x 300 = $300,000

Image courtesy of graur razvan ionut / FreeDigitalPhotos.net

Image courtesy of graur razvan ionut / FreeDigitalPhotos.net

In past posts, I’ve noted a few of my focus numbers for pretirement. For example I’ve targeted a goal of around $300,000 (plus paid-off mortgage) as my freedom number. (Think $600,000 for a couple.) I’ve also remarked on how many households pin their core monthly non-mortgage expenses at around $2,000 per month ($1,000 per person). This includes my own.

So if you’ve been aggressive and paid off your mortgage in record time, you are likely looking at monthly core expenses near that magical $2,000/month (for two people). And, of course, if that seems insane, you’ll probably want to examine your spending rates. However, if we accept that number, then we can safely say your Pretirement Fund number is probably somewhere around $300,000 for each person. It might be a little higher or a little lower based on your personal investment yield, taxes and other factors, but just to keep things simple, we’ll use round numbers for now.

In my own situation, I’m a little shy of that number, which is why I’m only semi-pretired today. I have too much net worth locked up in my house and, of course, made many dumb investing and spending mistakes over the years.

Which begs the question: How many times have I blown $1,000? It’s an important, but troubling question. Have I done it 300 times? More? It makes me want to go back and slap earlier me across the face.

Let’s take a look: (Making guesses at the exact amount in most cases.)

Over-improved my first home$30,000+30
Luxurious vacations over the past 20 years (At least $3,000/year on average)$60,000+60
Bought new car (Stupid, stupid)$40,000+40
Eating out (Maybe $40/week on average for the last 10 years)$20,000+20
Over-improving current house$30,000+30
Various electronics over past few years$15,000+15
Furniture purchases$10,000+10
Random other crap$20,000+20

So because I’m Pretired Nick, you might assume I’m some sort of Frugality Ninja (hey, good URL, someone should snag that!). But, really, I’ve been just as much as a big American spender as anyone else. OK, maybe not as much as most people, but still pretty bad. But I’m not here to shame myself before all of you, but rather to show HOW EASY it is to reach pretirement by doing nothing more than staying employed and cutting back on the spending.

$100 x 10 = $1,000

So you don’t think you’ve blown $1,000 all that many times? Let’s break it down: how many times have you blown $100? Dropping a hundo is easy. I sneeze a hundred bucks into a tissue just about every week! My numbers above are definitely under-counting the drip by drip of small purchases. Gas for the car, art, gifts, new shoes I didn’t really need, tools purchased unnecessarily and so on.

Have you dropped $100 just 10 times in the past year? Month? If you dropped $100 per week, that’s $5,200 each year. Doesn’t sound like that much money until you realize that’s five $1,000 bills that could have gone toward your pretirement fund — nearly 2 percent of what you needed right there!

I listed out just my big, memorable purchases above totaling to $225,000. If I had cut back just by $100 per week on average for the past 15 years (something that would have been very easy for me at various times), I’d have more than the remaining $75,000 needed to reach my Pretirement Fund goal.

$30,000 x 10 = $300,000

Or to frame things in terms of time, let’s say you’ve realized 40 years in a cubicle isn’t for you and you’d like to tough it out through 10 more years of your career and then be done. You’d need $30,000/year ($2,500/month) for each of those years on average (again, ignoring your mortgage and growth on the money).

But $2,500 a month seems like an impossible amount to put aside month after month! The thing is, many households have monthly budgets of $6,000-$8,000 or even more. Obviously housing costs are by far the biggest drag on people, but it’s also TVs, vacations, clothing, random plastic crap, lattes and car expenses.

I realize it’s too late for many of us. We can’t go back and add many years of savings to our lives. But like the Chinese proverb says: There are only two times to plant a tree — 20 years ago and today. Regardless of where you’re starting, build a spreadsheet, decide on your goals and build a plan to get there.

$100,000 x 3 = $300,000

It always comes back to real estate with me. Like I have mentioned many times, we really have more house than we should have given our goals. Should we choose to downsize — something we’re seriously considering — that should free up at least $100,000 that I can put toward my Pretirement Fund, putting me over the top! Or I could work a couple more years and save that up quickly given that I have very low expenses.

Which way will we end up going? We really have no idea at this point. But you’ll be the first to know as we wrestle with this final step toward pretirement right here in front of all of you!

Hopefully the math lesson wasn’t too silly for everyone. The point isn’t to teach my readers basic division and multiplication, but simply to remind that breaking big problems into smaller problems always makes things easier and that small spending, even $1,000 here or there, can really add up and keep you working much longer than you want. I’m living proof on both the negative and positive sides of that equation.

So what do you think? Does breaking your goals into bite-sized chunks help you get there? And how many times do you think you’ve blown $1,000? 

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Great cities — a forgotten key to your pretirement

Lovely Vancouver, BC -- photo from a recent trip. If you're looking for great cities, you can't do much better than Vancouver.

Lovely Vancouver, BC — photo from a recent trip. If you’re looking for great cities, you can’t do much better than Vancouver.

As infants we begin with barely a dim awareness of our surroundings. Eventually that blurry upward view of crib rails and ceiling lights turns into faces and walls. Shapes, colors, figures. Next an awareness that this is MY room. Then MY house.

We get older and learn to recognize our own street. We become familiar with our own schools and eventually our own neighborhoods and cities.

Some of us move away from these first towns and make our own homes elsewhere. A very small subset of the population identify specific criteria for the place they want to live and seek out that perfect place. Most of us, however, stay near where we grew up or move for employment.

Here’s the thing, though: For those in already pretired or driving toward pretirement, the city where you choose to settle matters. A lot. And, yet, it’s one of the most ignored keys to finding your freedom.

I think we tend to ignore this because it feels intractable. Maybe we don’t want to move away from family. We already own a home here. All our friends are here. I could ridicule each of those as excuses, but they’re actually all really great reasons to stay put.

But as I’ve said many times, pretirement calls for sacrifices. Even if you made a high salary, saved a massive percentage of it, and theoretically could pretire comfortably, it’s all for naught if you are set on living somewhere extremely expensive, such as Manhattan. It’s not just the expense of your home. Cities themselves have widely varying costs.

And it goes beyond cost as well. What’s the point of living inexpensively if you have to dodge bullets every day? Or have to breathe polluted air and drink polluted water?

What makes great cities great?

It’s impossible to make a comprehensive list of what makes a city great. But I’ll share a few things that top my list of things I find in most great cities. Feel free to add your own in the comments. It’s a topic I’m very passionate about, so the more ideas we can collect, the better.


I guess this one is obvious since it’s so fundamental to a place not sucking. But it’s not a binary element. You’re not “safe” or “not safe”. You’re more or less safe. And that can vary quite a bit even by neighborhood. Unfortunately there is some correlation (somewhat overblown, however) between the cost of an area and how safe it is. Because you’ll want to be living a low-overhead lifestyle AND be as safe as possible, it’s something of a balance. The way I look at it is there should be a reasonable level of safety and once that’s met, I’ll just move on to other factors. Besides you probably have about the same odds of being flattened by a latte-slurping soccer mom in her SUV as you are to get mugged in most cities.


I won’t dwell on this because it’s somewhat obvious, but the cost of living and especially the cost of real estate is a key determining factor. This can be tough, though, because there’s a conundrum at work here: When a place is nice, rich people want to live there and thus drive up prices. If an area is a craphole, the people who can move away do so and you get self-selecting conditions for blight. Cities struggle with this all the time when they try to keep housing affordable. They allow cheaper construction and the area turns into a ghetto and they end up paying a fortune for police service and basic public safety. They make an area nicer and wealthier people move in and drive out the original residents. But if you’re pretired, you may be able to live farther from job centers and thus be able to keep your housing costs low while still enjoying a great area.


This one is so often overlooked but it’s so important in allowing you to drop your car expenses. If you and your spouse no longer need to commute, you might be able to drop down to one or even zero cars. Plus you’ll enjoy your lifestyle more than ever as you don’t have to get in the car to go anywhere. Another thing to think about is your transition into traditional retirement, or to be blunt, think about when you’re old. Driving is difficult and scary for seniors. Build yourself a lifestyle now that takes that strain off your future self.


I’m a huge public transportation fan. Unfortunately I live in one of the worst cities for getting around without a car. Here in Seattle, they’ve had many opportunities to build robust transit systems and they’ve been voted down repeatedly by short-sighted voters. It’s surprising given how liberal we are here. It’s only been in recent years — decades after nearly every other major city has deployed at least a light rail system — that we’ve taken the plunge. Our bus system is OK, but depending on where you live and where you need to go, it could double your travel time. It was disheartening returning to Seattle from a trip to Tokyo a few years ago. Their system is mind-meltingly awesome and to step off the plane in Seattle to our rinky-dink system was just pathetic.

Bicycle friendliness

A Barcelona bike path. Note the grade separation from walking path to bike path to roadway. Picture taken from upper deck of tour bus. Also note the entrance to the underground subway.

A Barcelona bike path. Note the grade separation from walking path to bike path to roadway. Picture taken from upper deck of tour bus. Also note the entrance to the underground subway.

Bicycling is by far the most efficient way to travel short distances but so many cities and towns make this so difficult. Seattle has been improving its bicycle infrastructure in recent years, but I’ll be honest: it’s still ridiculously bad to the point where I do not feel it’s safe. A bicyclist dies here every couple months and our city leaders are still thrashing around and throwing tons of money at the car culture still. On top of the safety issue, we are renowned for our many steep hills. I’ve actually never seen a bike going up the hill I live on, although we see bikes going down quite often. The best way to end up in a bicycle friendly town currently is to move out of the U.S. or to a smaller town. Hopefully in a few years that changes drastically.

Take a look at my picture of the bicycle lanes from my recent trip to Barcelona. Cars, separated from buses, separated from grade-separated bike lanes, separated from a lovely walking path. Brilliant and simple. (And they have a wonderful underground subway system.) Contrast that to here where you’re lucky if you find a crosswalk that still has some paint on the road.


We all like a clean city, but this goes beyond where there is litter blowing down the sidewalk (important as that is). Cleanliness extends to things like the air you breathe or the water you drink. It’s important to think about the long-term risks to your air and water. Are they fracking near your home? Are there coal-burning plants nearby? How clean is the water in your area? This is important not only for enjoying the many, many years of awesome life you have in front of you, but also for ensuring your health. What’s the point of living an amazing life of pretirement if you end up hobbled with chronic illness?

There’s another important point to finding an unpolluted city: Your home value. Those homes that had their wells poisoned by fracking are now valueless. Those people who thought they were being so clever by leasing some land to natural gas companies have wound up trapped in a house they can’t sell, suffering from devastating illness. It may not be as dramatic, though. Just in general, a rundown, dirty or polluted neighborhood can mean lower equity growth and a harder-to-sell property.


I used to always say that if I ever moved again, I wanted an upgrade from Seattle’s dreary weather. That’s actually becoming less important to me in recent years, although I still often long to live somewhere with more sun. As a native Washingtonian with webbed feet, however, I’m finding it harder to deal with the heat than the cold. Although I still hate being cold. Probably I’d adjust after a few months somewhere warmer and that’d probably be good for my overall health. The important point, though, is that I’m not moving somewhere where the weather sucks just because it’s cheaper. Nasty muggy summers and frigid snowy winters? No thanks! I do like the weather in many parts of California, for example. In Northern California, the weather is quite temperate and when I lived there I rarely remember being either too hot or too cold. That could be why it’s so overpopulated, though.


What do I mean by infrastructure? I’m not necessarily referring to the classic governmental meaning or roads and bridges. Rather, I’m talking about the various functions that support your lifestyle. For example, transportation, medical facilities (you may not want to be too far from a hospital for instance), grocery stores or anything else you might need. This is probably the main reason I’ll likely stay within or near a reasonably large city instead of moving to a rural location. I once considered moving out to the country but I imagined rushing to a hospital an hour away in case of an accident, and the move just didn’t seem too wise. Add to that the need to drive nearly everywhere and country living just wasn’t as inexpensive as it first appeared. So I’m focused now mostly on medium- to small-sized cities.

Open space

Humans have a very real need to be outside. Beyond fresh air and exercise, there is something in us that needs the natural world to keep us functional. I think it’s safe to say that someone who is outside in nature every single day is highly unlikely to suffer from depression. Open spaces act as the lungs for cities clearing the air and softening the landscape. We have some great in-city areas here in Seattle, where you almost forget you’re in a city. And we can be deep in the mountains within a 30 minute drive. From an open space perspective, Seattle is hard to beat.


If your local town looks like a Long John Silver’s raped a Wendy’s it may be time to re-evaluate your life choices. Car-oriented, strip mall development is extremely hard on the psyche and is a very expensive way to live, especially if you’re still commuting to work. This cheap development also leads to a cultural desert, where there’s nothing to do and nowhere to go. Contrast that with a similarly-sized city with a cute downtown area, parks and open space. You’ll find charming restaurants opening in such an area, art galleries, plus many free entertainment options will sprout up in the shadow of the trees. You might say work and money are HOW we live, but culture and family are WHY we live. Don’t overlook it.

Aesthetic beauty

Not everyone will agree this is important, but to me it’s critical. Something about my temperament demands I live without being visually assaulted by atrocious surroundings. I paid way too much for my current house because I (thought I) needed to see the shimmering Puget Sound every day. Not unlike the importance of culture, living in a beautiful place brings a lot of light into your life and will make all those pretirement years that much more enjoyable.

I could probably come up with another 50 important things, but I’d rather hear from you about what you look for in a place to live. What am I missing? I’d really like to have a robust list of criteria because if and when I decided to move to a different locale, I want to make sure I approach my choice intelligently.

Let me know what you think in the comments! 

What is the best way to invest $100,000?

What would you do if someone handed you $100,000?
Do you think you know the best way to invest this money?

money3Americans have a unique challenge in life and have developed an adaptive skill that people from many other countries can barely even conceptualize. Although it’s a very real problem for we Americans, in many parts of the world they’d give almost anything to have this problem.

The problem: Too much choice.

The other day I spent 30 minutes looking around on Netflix for the movie that was an exact fit for my mood at that exact moment. We walk into our grocery stores and have to apply our well-honed, complex analytical skills to decide which cheese to purchase. Want cereal? Flakes or biscuit? Sweet or savory? Real sugar or HFCS? Should my eggs be cage-free or vegetarian fed? Both? But those are $6! Time to paint the living room? Choose from 10,000 unique shades of light brown! Whatever the choice of the moment might be, we in America spend a lot of our time wading through various buying choices and these choices are a reflection of our person and a projection of our aspirations.

I would flip through catalogs and wonder, “What kind of dining set defines me as a person?”
-Jack, Fight Club

If you’ve ever seen a recent immigrant shopping in an American supermarket, it can be fascinating. Often it’ll take them forever to make a decision as they carefully wade into this sea of decision-making. Those of us who have been running this gauntlet for some time now have built up resistance to the sensory overload that is a modern store. We can usually zip through using well-tread criteria and remain unscathed.

When it comes to deciding the best way to invest, it’s not always so easy

Since I recently sold my fourplex, I now have some investment funds to redeploy. After cleaning up some other financial loose ends, I’ll have about $100,000 to invest elsewhere. Getting to this point was easy compared to the next step of actually pulling the trigger. (Incidentally, the first step in getting organized in investing is to sign up for a free account with Personal Capital so you can get a handle on your current situation. You can learn more here.)

Like a freshly arrived Somalian’s first visit to a Seattle Safeway, I’ll admit to being somewhat overwhelmed by my options. So I turn to you, readers, to help me out. What’s your advice for someone with a chunk of change in his pocket?

I’ve been considering a few different options over the past few years I’ve been trying to sell the fourplex. Many of them I was completely ready to move on at various points but since I couldn’t access the funds, they never happened. Some of those ideas have been completely dismissed while others are still being considered.

A few of my favorites:

Is more real estate the best way to invest this money?

Real estate is like a drug, and I’m hopelessly addicted. I love how it’s in my control (mostly) and I love how it’s tangible. With my own effort, I can enhance a property to increase its value. During the depth of the real estate crash, I was licking my chops at some very underpriced single-family homes, particularly in the city of my birth, Vancouver, Wash. Check out the inventory! There are a ton of decent houses available for less than $200,000 right now. Using my funds and tapping our home’s HELOC fund, I could pay cash* for one of these babies. Hard to resist! Rents in that area are pretty low, at maybe $1,200/month for something pretty nice. I could basically earn a 5%+ yield (although surprises always await with real estate!) and potentially also get some additional gain from equity growth as the market improves in that area.

(Interesting side note about this area: A few months back I was looking at what kind of inventory was available and I noticed almost every listing’s status was “short sale pending”. Page after page of listings. Then I read about how companies like the Blackstone Group were buying in big to the single family housing market and renting the homes out. I’m pretty sure these big investment firms were single-handedly driving up the prices. If I could have sold my plex a couple years ago and pounced, I could have already made well over $100,000 down there.)

So if I get lucky, I could earn something close to what I could earn investing more traditionally PLUS there is the potential to hit another jackpot. If the economy got quite hot in the Portland-Vancouver area, a price increase of $50,000 to $100,000 isn’t out of the question. But if the economy was doing that well, a stock market investment could do quite well also.

On the other hand, if I get unlucky, just a few repairs could wipe out every year’s income. Or, even worse, I could get dragged into negativeland and would need to cough up cash to support the endeavor. Additionally, the sporadic, unreliable income is what made rentals so unappealing with my fourplex. If I’m only going to earn 5% or less, I’d better not have to take a bunch of annoying phone calls to get it.

If I went this route, I’d plan to hold for three years minimum, and hopefully five years maximum.  Hmmm…

What about REITs?

Instead of buying real estate that I have to personally deal with, buying Real Estate Investment Trust funds might be the best way to invest this money. These funds let you be invested in real estate and as an investor with others instead of holding the bag all by your lonesome. I have a few REITs already but hadn’t bought in further because I was already so deep in real estate. I’m still considering this direction.

Why not just buy individual Dividend stocks?

If you read my post on Dividend Mapping, you know I’m somewhat entranced by dividend stock investing. Yes, like any investment it carries some risk and has its own share of pros and cons. My favorite things about dividend stocks are that they’ll continue paying as normal whether the price goes up or down. From an income standpoint, it’s a little more “controlled” in the sense that the dividends drip in like clockwork, helping me avoid some of the wild swings of real estate. That stability alone is worth something to me after dealing with the roller coaster of real estate income over the past decade.

I’ve done a bit of looking around at what individual stocks I could pick up, in a modified version of Dividend Mapping. Really it’s closer to creating my own mini mutual funds. I’m pretty happy with my selections so far. I found some stocks that I wouldn’t have otherwise noticed that I really like. So why not just buy in? Well, my track record of buying anything outside of a fund is atrocious. You know how it always rains after you wash your car? That’s how it is with me and stocks. I used to joke to my friends that they’d better sell because I was buying in, thereby guaranteeing a drop. Yes, it’s been that bad. So that eats at me when I consider pulling the trigger.

Could a good ol’ fashioned Vanguard fund be the best way to invest?

In what is probably the simplest approach, I could just buy into one or more Vanguard funds, such as the Total Stock Market Index (VTSMX). They are tried and true and in some ways this would be the lowest risk approach. They also have some managed payout funds that I haven’t really looked into yet. Probably the smartest thing to do from a traditional investing perspective would be the classic combination of total stock market, bonds, some international, etc. to provide the diversity needed down the line.

So on the plus side, there are solid, relatively safe investments available. On the negative side, I’ve felt like we’re overdue for a market correction and buying in now would almost guarantee it! If the market took a fairly big dip, that would certainly make my decision easier.

How about a combo platter?

Naturally combining several different approaches is often the best way to go. It gives you good solid diversity and also lets you catch a wave if a particular sector takes off. But what combination?

I could also dollar-cost-average my way in to some of these choices to protect myself from a sudden drop, but that entails leaving a big sum of money uninvested.

So how do I decide on the best way to invest this money?

I’ve (obviously) never been a very skillful investor. I did well investing in myself (education and career learning) and I got lucky more than once. My lack of confidence in market investing pushed me toward real estate and I was fortunate that my timing coincided with a low interest rate era that caused a big housing spike.

The interesting thing about my current conundrum is that had I received the same amount of money over a number of years, it would be much easier to decide where to put it. It’s the Power of the Chunk in action! Get a big chunk all at once, the stakes immediately seem much higher! Taking a big hit in the market would hurt much more after dropping in a big sum of money than it would before I was using it as income and when it was just a collection of smaller investments (if you follow me).

So here I am, looking at my various options, thinking about what to do next. I can tend to be an over-analyzer and the waiting carries its own danger as well. I’ll be sure to let you know what I decide!

What do you think? What is the best way to invest $100,000? What would you do if someone stopped by your house and handed you a check for $100,000?

Let me know your thoughts in the comments. And if anyone wants to write a guest post on this topic, send me a note through the contact form. I think it’d be great to have a few different voices weigh in on this topic. 

*Paying cash isn’t my first choice, but last time I checked, the credit market was so tight that getting a loan was near impossible even though I wouldn’t be using my income from working to pay for it even if I had a job. It might be possible these days, but I haven’t looked into it. 

How (not) to sell a fourplex — Part II: Angry Bird Boogaloo

How to sell a fourplex — the lessons learned

Angry BirdsWelcome to Part II of my saga on how to sell a fourplex.

In the last episode we learned how I went from mid-level, average pay employee to suddenly relatively wealthy in a very short time period. Having grown up as a dirt-poor farm boy, I was desperate to not blow my opportunity. I put some of my windfall into two fourplexes, one of which I sold some time ago. When we last left our story, it was spring and I had just received an offer on my fourplex. 

After years of trying, I couldn’t believe what I was seeing: A legitimate offer from a well-funded buyer who was already pre-approved and ready to go. The offer wasn’t for full price, reflecting the current buyers’ market. But I’d raised my price by $20,000 over the previous year’s selling price so I was still in great shape. I assumed there would be some requested repairs but my starting place was so much better than the prior year.

I was also much smarter about the preparation on the front-end this time. My realtor and I met my property manager at the building and did a walk-through to try and catch any obvious surprises that might scare away a potential buyer. I hadn’t actually been to the site in years and was hoping to never see it in-person again, but there I was, once again smelling that distinct aroma that for some reason only rentals give off.

Why would I sell?

My reason for selling was half emotional and half practical. I could make a convincing argument for holding it or for selling it just depending on how I looked at things.

The practical side:

  • I had been theoretically living off this income since I left my last corporate hellscape. Unfortunately the maintenance costs had been running very high (mostly due to various improvements aimed at selling it).
  • I was at the point where the kitchens and bathrooms needed a major overhaul if I was going to keep it. At at least $5,000 for each, that’s $40,000 more I’d need to invest in the building. And that’s if I did the work. And I couldn’t really even do that myself right now while I take care of Pretired Baby so I’d really need to pay someone to do it for me, dragging the price even higher. It’d take awhile to make that back. If I was honest, it really should be completely replumbed and rewired as well. Essentially the building was reaching the end of its useful life. Nothing really “wrong,” just basically wearing out.
  • Now that I was in a place where it was becoming possible to sell it, I began looking around at other investment opportunities. When I did the math on what I could earn by reinvesting my money elsewhere, I could clearly do better or at least as well in another avenue. Additionally I was watching some great single family homes go for dirt cheap. (I missed out on the best deals already because I couldn’t get my funds out of this property.) I did my best to look at the situation dispassionately: If I were a ruthless corporate holding company, would I continue to invest in and hold an under-performing business unit? Or would I eventually cut my losses and reallocate the funds in a better performing place?
  • The clincher: aluminum wiring. The building was built in the 1970s, which was the source of nearly all its headaches. Now I advise people to avoid buying anything built in the ’70s, but before I was such a brilliant person I blundered into buying something built during this cursed decade. There are many problems directly related to the cheap construction of this era, but the worst one was the aluminum wiring. Now electricians will tell you that aluminum wiring isn’t necessarily “unsafe”, especially if it’s maintained correctly. Its two main problems are that aluminum expands and contracts at a higher rate than copper, causing connections to loosen over the years, and, more importantly, it doesn’t mix well with copper, which is what you’ll find in every electrical device  you can buy. The mixed connections will heat up and can even cause a fire. So while it wasn’t an imminent danger and I always took very good care of the electrical system, it was always a worry.

The emotional side:

  • Like I said the building needed significant modernization if it was to remain a viable rental. They were pretty nice units as rentals in this sector of the market go, but beyond just being a little rough around the edges, they really needed to be brought up to modern standards. And I was just sick of dealing with them.
  • Tenant hassles. Although I fortunately didn’t have to deal with tenants directly, I was still dealing indirectly with all the stupid nonsense that takes place. And even when it wasn’t extra costs due to a renter throwing their trash outside instead of actually putting it into a garbage can, it was someone not paying their rent or bringing in a prohibited pet cat and stinking up the place.
  • Even beyond the aforementioned aluminum wiring, every year (especially around christmas) there were occasional news reports of a tenant burning down an apartment building. The most common cause seemed to be overloaded electrical outlets (multiple extension cords and plug expanders on one outlet) followed by smoking or candles. I never had any problems, but I was always worried about a tenant doing something stupid.
  • Although the cashflow was normally good, it never failed that a big repair would coincide with a vacancy. So while the building did OK on a yearly basis, it wasn’t exactly a reliable stream of income.
  • Feeling trapped. While I’m still a big believer in real estate investing and find it actually pretty hard to lose money with real estate, it’s obviously not very liquid. When the market took a big downturn, I was salivating at the cheap stocks and houses for sale but I didn’t have the free cash to pounce. Frustrating!

So after putting my doubts to rest, I decided at minimum I was in the win-win situation. Either I’d sell and reallocate my money to some place more lucrative, or I’d hold it and pocket another year’s rent. Which is why I now found myself walking through my units after all these years, trying to see them through the eyes of a potential buyer.

Actually, the place was in great shape. The best shape it’d been in since it was built, probably. There wasn’t much to request. I asked for some dirt to be evened out in the backyard, a new light fixture cover, a few other minor repairs, but generally there wasn’t much to complain about. The roof was brand new, fixed the prior year after some potential buyers complained it was feeling soft (it was due anyway). I replaced the gutters and brought in fresh bark to spiff up the street view. There were still some signs that birds had been accessing some areas in the attic space and I asked the property manager to have someone come out and seal that up a little better.

After my walk-through, I had to think about it a bit. Did I really want to sell? After all, it looked like something I’d consider buying today, even knowing what I know. Maybe I should hold another year and pocket a little more rent? After all the market could run up another year or even have a nice jump. But in the end, I knew my reasoning was sound and even if I could squeeze a little more money out of it by waiting another year, I knew I was done.

An offer — immediately

We polished up the listing paperwork, threw it out on the internet.  My realtor was very nervous about my strategy of raising the price so substantially (we’d be the highest-priced fourplex in the area and hardly anything had been selling). But I wanted to present a show of strength — I wasn’t a short-sale. I didn’t need to sell at all. Buy a great building at a fair price, people!

Well, imagine our surprise when an offer came through right away. A little below my asking price, but still higher than I’d tried to sell it for the year before. And it was clean. The buyer’s realtor boasted of his clients “business sophistication” and how well-funded he was. We accepted the offer and braced ourselves for the inspection phase.

It was some time around this point when I was informed that one of the tenants wasn’t paying and couldn’t be reached. So it was time to launch an eviction process on top of everything else.

Anything that involves gaining access to the interior of a rented unit takes a lot longer than you think it would. You either have to work around tenant schedules or you have to post legal notice and wait a couple days to get access. Plus I now had a wildcard. Would the tenant simply be gone or would there be a stubborn refusal to cooperate? Would the unit be destroyed in the middle of this transaction? Would the buyer walk away?

So it was nearly a week later that we got the inspection response back from the buyer. And the response was they wanted further inspection. The roof apparently still seemed soft in a few places (even though it was brand-new). They wanted to cut holes in the upper units to gain access to the attic space — WTF?

Would I ever close?

There were no attic access panels in my building at all — something I’d never noticed or thought about before. In retrospect, it was a little surprising that the inspector didn’t notice that when I bought it. I greatly dreaded letting someone cut into my ceiling. For one, who knows what they’d find? Did a $50,000 problem lurk up there unbeknownst to me? The unit where the cutting-in would need to be done would be in a unit where a new tenant had just moved in. How annoyed would this tenant be with the noise and drywall dust? Plus, I felt terrible that I’d have to disrupt this poor person’s life again.

In the end, however, I decided it was reasonable that a buyer want to look up there. After all, if I said no, they’d assume I was hiding something, so I acquiesced.

Now in the 1970s, developers here in the Seattle area tried to replicate a lucrative strategy from California. It was pretty simple: Build a lot of cheap housing and flip the buildings off to hungry investors. Unfortunately they also tried replicating the construction techniques, the silliest of which was a flat roof design. One thing you might have heard about the Seattle area is that we have this thing called “rain” here. Sometimes a lot of it. In the area where my property was located you get a ton of it.

Once the inspector peeked up into my attic, we learned that my building had once been a flat-roof construction and the sloped part was added later as sort of a superstructure sitting on the top. Worse, the inspector felt it was flimsy and had even been built with scrap materials. Naturally the buyers acted as if this was an extreme hazard (even though the building had already lived through 40 years of rain, snow and wind without any problems). They demanded it be rebuilt to modern code. This was a big problem because not only would it cause big delays and be expensive, but the tenant impacts could be significant.

Additionally they reported there were STILL BIRDS living in the attic.

So we managed to talk them into a credit for the roof so that we could close sooner (ouch!). We sent the contractor back out AGAIN to deal with the birds. He did some additional sealing and assured us that this time it was definitely all sealed up.

Feeling like we were finally in good shape, the buyers did another reinspection and quite indignantly told us several items hadn’t been completed. Aaaarggh! Worse, they said the building still had birds penetrating the structure and what were we trying to pull?

Our contractor went back out once again and did find one spot where there still some birds. They were babies and in a corner where he couldn’t reach. He could seal them up inside, but we none of us wanted to do that. He agreed to leave a gap so the cheeping babies could escape when they were old enough and told the buyers we weren’t baby bird killers so that would have to be good enough.

A wackjob realtor

Early on in the process I began to get the sense that buyer’s agent wasn’t playing with a full deck. The tone of his emails were disproportionately indignant and there was always a lot of complaining that his buyer was “taking all the risk”. Worse, he became increasingly dishonest, abusive and rude. On top of that we experienced occasional passive-aggressive behavior where he wouldn’t respond to emails and calls from my agent and wouldn’t rationally discuss how to work through the various issues to reach a closing. Somehow we had blundered into a deal with a nightmare opposing realtor.

As the months rolled by, I began to regret not listening to my instincts. I should have canceled out of this deal as soon as I realized I was dealing with an unprofessional nutjob.

I am a very good negotiating partner. Having taken negotiation training, I go into all my deals knowing my walk-away point and work cooperatively with my opposing partner to reach agreement. If we can’t reach agreement, it’s based on our interests not being aligned and both sides typically walk away feeling OK about the interaction. So I was willing to accept nearly any reasonable request. After months of dealing with this psycho, however, I told my realtor I was done. If they asked for even $100 more the answer was no and I would flush the deal. I had completely had it.

Fortunately(?) my realtor was able to talk me down and held things together and we finally reached the point where all sides were satisfied and we were on to the closing.

Just one hurdle left: the birds. Would they be satisfied with our plan? To make everything extra legit, I had a pest control company go out and tell us what should be done. They suggested some additional screening be added on top of what the contractor had done. So once again, we had him go out and seal up the building, leaving a gap so the baby birds could escape when they were old enough. Everyone finally seemed satisfied.

I’m brushing over a lot of detail and back-and-forth that took place. It was endless. I lost track of how many close-date extensions I signed, but it was several. But finally, we just had to wait for the closing paperwork from the lender to come through and we’d be there. Just a few more days.

I got the invite to sign papers. My wife and I went out to an expensive dinner to celebrate and I started to relax.


As you might expect, the dinner was premature. The next day, I got a call from my realtor. “I hope you didn’t crack open that bottle of wine yet,” he said. There was a hold-up on the lender side. Turns out my brilliant, well-qualified, “business-savvy” buyer thought it’d be a really good idea to buy another house right in the middle of our close. Um, what?

The lenders had to re-analyze the situation. We signed another extension. And waited. I started thinking about next steps in the event we didn’t close. I’d need to fill the vacant unit asap. Since summer was now nearly over, I could keep it listed, but it’d be unlikely to get another offer before winter kicked in so I began thinking about rehabbing the units.

Finally the call came in: the lender was still going to make the loan, but they would have to redraw the paperwork. Because it would put us past the 15th of the month, I’d need to make another mortgage payment (which should be refunded back to me later). Annoying!

In the meantime, the contractor swung by, noticed the baby birds had flown away, and sealed up the final gap in the building.

Finally the day came. It sounded like the paperwork would be processed by noon and we should be closed by 3 p.m. Amazing! I kept my phone handy all day, frequently checking my phone to make sure I was still signed in to Google Voice (see my lower cell phone bill project for background!) Then the call: No, I wasn’t closing. The lending paperwork wasn’t in yet and could be another week. At this point, I pretty much gave up. If it closes, fine, if it doesn’t, whatever. I. Was. So. Done.

But the next week, the call I was waiting for came in from escrow: the deal was closed. The paperwork arrived via email later that day.

That night I slept the long, deep sleep of the relieved and awoke to a shiny summer morning. A cool breeze was blowing in the window and everything felt clean and carefree.

The next day I called my property manager to let him know we no longer owned the building. He sounded relieved after months of hassle. “That’s good timing,” he said. “I just got off the phone with a tenant. Her shower isn’t working. I’ll let the new owner know.”

Postscript: lessons learned

Looking back, I can now see I made many errors throughout the ordeal, many of which were caused by my emotional desire to move on with my life. Fortunately I was in the win-win position where I was OK if we sold and OK if we didn’t sell. Here are a few of the lessons I learned, just in case it helps anyone else down the road:

  • Don’t be bullied. I’ve always found the best way to deal with bullies is to stand up to them (they’re nearly always so stunned someone is saying no that they collapse immediately). But in this case my posture was too accommodating. I wanted to be helpful, transparent and honest. They took advantage of my attitude and I should have put a stop to their craziness long before I finally did.
  • Say no to stupid requests. One of my dumber blunders was agreeing to do the sewer inspection for them. I just agreed to it without thinking, since it seemed like a small thing. Later I was like, “Why the hell am I doing their inspections for them?” I knew better and fumbled right into that one. I’m sure the buyer got a good laugh out of that one. Fortunately for me, my realtor agreed it was a blunder and he picked up the tab for that.
  • Make sure tenants are stable before you list. We were very close to having an empty unit filled when we decided to list. The vacant unit made for a nice convenience since the prospective buyer could view the empty unit and make sure they were fine with the basic set-up before making an offer and requesting access to the other units. However in the midst of the sale process, another tenant stopped paying, triggering an eviction. That meant the buyer would be buying a half-empty unit, sending up all kinds of red flags. In my case they buyer wasn’t sophisticated enough to understand the potential impacts, but it could have been a major problem. Most worrying for me, was that the lender could actually hold up the deal until all units were full. In the end, it was just an additional stress point, but it didn’t have any real impact. The buyer asked us to fill the unit where the eviction had taken place and we in turn asked if they had a lease they wanted us to use or if they wanted to review the potential renters first. They never responded to our questions on that so the building actually closed with just three units full.
  • Place time limits. Earlier on I should have realized they were just toying with me, signed a final two-week extension and let them suck it. But I kept playing along until the very end.
  • Refuse additional inspection. Now for something reasonable, I think it’s only fair to allow further inspection. But my building had been operating just fine for 40 years without issue. To allow someone to cut into a tenant’s unit to look for trouble was a bad idea. I should have refused. They may have backed out of the deal, but I would have been left then with a sane buyer or another year of rent.
  • Pre-inspect your own building. It wouldn’t have saved me from a ton of hassle in my case, but I could have avoided a few glitches by hiring my own inspector first. I think it’s definitely a good idea.
  • Hire a local realtor who knows the area and who knows multifamily. I love my realtor and I especially like that he knows how to hold deals together, but his distance from the property did create some hassle and if he’d been local he would have known the buyer’s agent was a loon and we could have avoided a mess early-on. He also didn’t have a ton of multifamily experience. That was OK but it could have been helpful if he had a little more savvy in that area.
  • Don’t deal with crazy. In the latter years of my working career, I pretty much just stopped dealing with crazy people (which is harder than it sounds given that at least 30% of the workforce is basically nuts). I should have backed away once I saw I was dealing with a crazy person. Instead I tried to fight through it, causing myself all kinds of stress.

Maybe one of these days I’ll write up some advice on owning rentals in general. But hopefully if anyone out there is looking to sell a fourplex, some of this advice will be helpful.

Let me know what you think! How badly did I botch this deal? What else could I have done differently? 

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