Wednesday, September 22, 2010

How I Became a Landlady

I never thought I would own rental property. I'd heard too many stories about careless renters and middle-of-the-night emergencies for that to seem like a good idea.
However, as I am about to tell you, I suddenly, and quite magically, became a landlady
in the summer of 2002, while on a mission to do something to improve my financial situation.
At the time, I was newly single, living on a combination of savings and income from my landscape design practice. I had money from a divorce settlement plus a modest nest egg invested in a 401K. I was working with a financial advisor who put my money into mutual funds and bond ladders. She assured me that I was doing all the right things. My money would grow and I would be prepared for retirement.
But as time went on, my brokerage statements told a different story. Each month, I watched my assets shrink at an alarming rate.  I asked my advisor if there weren't some other investment options. She encouraged me to stay the course. She showed me articles and charts showing that the stock market was, over decades, the best way to accumulate money. She showed me more charts showing how people who get out of the market and come back later make far less than people who buy and hold. Again, she told me that I was on the right path. 
I wasn't reassured by the charts and graphs. I was in my 50s. I could not afford to wait and see if the "buy and hold" strategy would work. Nor did I have disposable income available to feed the 401K kitty every month. I needed my money to work for me right then, not sometime down the road. In spite of what my advisor said, I was sure there had to be a better way.
There is a Buddhist saying: "When the student is ready, the teacher will appear."

In my case, the teacher came in the form of a book: Robert Kiyosaki's "Rich Dad, Poor Dad." Even though this book had been a best seller for a long time, it had been flying under my radar. But once my interest in finding better ways of investing picked up, I started to pay attention to whatever information crossed my path.

I was drawn to this book because of the title. My late father - a good, kind, hardworking man - had always struggled to make a living. I felt life hadn't been very fair to my dad. He deserved better. What was it that other men knew about work and money that he didn't? I wanted to find out.

As I started reading, I realized why "Rich Dad, Poor Dad" was so popular. It gave me hope and a completely new way to look at money. I could not put it down! The idea that instead of working for money, money should work for me made so much sense. This was exactly the information I had wanted, and never received, from the financial advisors I'd worked with over the years. (If you've never read this book, it is well worth your time and the few dollars Amazon will charge to bring it to your door. A lot has changed in the world since this book was written, but the basic principles of building cash flow streams and putting your money to work for you are just as applicable today.)

I finished reading the book just before falling asleep that night. I woke up excited about what I had just learned and eager to apply that knowledge. But first, I had business to attend to. I had a meeting scheduled with clients ready to discuss the next phase of their landscape design.
I will never forget driving to that appointment. It was a beautiful summer morning. I was high on the possibilities that were opening up for me. And as I drove across the I-90 floating bridge from Seattle to Bellevue, I repeated to myself over and over, "I don't know how I am going to do it, but I am going to have assets that produce income. I don't know how I am going to do it, but I am going to have assets that produce income." 
I arrived at my clients' home and we began our meeting. About halfway through, the phone rang and the husband excused himself to answer it. He came back a few minutes later, very excited. The call was from a real estate broker who was helping them (interestingly enough!) move their money from the stock market into a portfolio of investment properties. Their broker had years of investment experience and was teaching them how to choose and manage properties. He was calling to let them know that the offer they made on a property had just been accepted.

I could not believe the turn this conversation had taken! I had been obsessed with the idea of investment possibilities on the way to their house. I had no idea what those possibilities might look like until that phone call, but what my clients had to say about real estate investment sounded interesting and their excitement was contagious. I left the meeting with their broker's phone number.

I called the broker when I got home. I told him that I'd like to meet with him, but didn't want to waste his time since I wasn't a high income earner. I briefly outlined my situation and how much I might want to invest. He invited me to come in to talk. He said he wouldn't charge me for his time and that within an hour we would know whether real estate investment would be a realistic possibility for me or not.

A few days later, we met. At the end of our meeting he told me that I was in better shape than I thought.  Based on the money I had available to invest, he said I could qualify to buy either a triplex or four-plex, provided that I would live in one of the units. I told him that I didn't want to leave my neighborhood. He advised me not to get too attached to that idea because properties didn't come available in that area very often. As I left his office, he said, "Remember this is not an emotional decision. It's not like buying a personal residence. This is a business decision."

OK, I heard him, but I left his office SO excited! I could do this! I couldn't remember the last time I felt so enthusiastic. I drove home, buzzing with anticipation. I could not believe how quickly things seemed to be falling into place. I had finished reading "Rich Dad, Poor Dad" only 5 days earlier and already I was on my way to owning a major asset that would produce income! It was almost unbelievable.
But there was more to come! As I pulled into the parking area next to my apartment, I saw that while I was meeting with the broker, a sign had been posted at the triplex across the street from me. It said "For Sale by Owner."
I could hardly believe my eyes! I immediately called the real estate broker, who, upon hearing the excitement in my voice, again reminded me that buying investment property should not be an emotional decision. Nonetheless, the property happened to be priced right. I made an offer. It was accepted. Less than a month later, the deal closed. I was a landlady.

I have never, for a moment, regretted that decision.

[All of this happened before I'd heard of Jerry and Esther Hicks and before movies like "What the Bleep!?" and "The Secret" came out.]
My landlady story is proof to me that: Nothing is too good to be true. Nothing is too wonderful to happen. Nothing is too good to last.

Monday, September 6, 2010

Listening to the Train

A few weeks ago, I went down to Portland, Oregon, to visit friends. Portland is about 175 miles from Seattle and, by car, the trip takes roughly three hours, traffic permitting. Which is to say that it is better to plan on four hours each way. Traffic along Interstate 5 between the two cities has become steadily more congested and, over time, making the trip by car has lost its charm for me. These days, I take the train.
The trip on Amtrak takes 3-1/2 hours from Seattle to Portland, with 5 or 6 stops along the way. I can read a book, watch a movie, walk around, get lunch or take a nap. But on this particular day, I amused myself, as you will see, by taking pictures out the window of freight trains as they passed alongside us.
Freight trains move more freight across the US (42%) than any other form of transport. In terms of ton-miles, trucks come in a distant second (28%). Trains are everywhere, it seems, their tracks crisscrossing the nation, connecting cities and rumbling across the wide open spaces between rural communities.
But most of the time, I don't much notice trains. I hear them, of course, and see them in my peripheral vision as I am driving to and from downtown Seattle on Highway 99. But mostly, trains run in the background of my life. So on this particular day, I was was surprised to find that sitting in a window seat on a train, photographing other trains, was a thoroughly engaging and thoughtful way to pass the time.
Visually, trains have a lot to offer. Different sizes, colors. Forms that follow function, like the tanker below.
When I pay attention, trains bring back memories. As I looked out the window, "ridin' the train," the Grateful Dead's rendition of Casey Jones easily came to mind. As did Arlo Guthrie's voice, singing the chorus of "City of New Orleans."
Freight trains remind me of childhood. I grew up in San Francisco's East Bay Area in a town then called Irvington (which later became Fremont). Our house was in the middle of the block. At the end of the block was a pickle factory and, running perpendicular to our street, the railroad tracks. Even now, 50 years later, I have a clear memory of laying awake on hot summer nights, the windows open to catch any bit of breeze. The air was heavy with the sour smell from the pickle vats. (I wonder now what kind they were. Dill?) And the only sounds were the clatter of passing trains and the groan of train cars being rearranged.
In those days, homeless men, hobos we called them, would sneak onto empty train cars and ride the rails from one town to another. When they got off the train, they would go door to door, offering to do chores in exchange for something to eat. Since our house was just a half block from the tracks, we got to see these fellows on a fairly regular basis. Looking back, it is surprising to me that my mother, one of the least trusting people I've ever known, used to actually "hire" some of these guys. She'd occasionally give a man some outdoor job to do and then set about making sandwiches and coffee while he worked. She would never let me go outside while he was there. She would never let him come inside the house. After he finished his work, she would put his food outside and instruct him to knock on the door and hand her the empty dishes when he finished. 
But of all my memories involving trains, the most indelible is one from a time in my 20s when my sons were little boys. At that time, we were living in southern Illinois near St. Louis, and I had to cross at least one set of train tracks to get anyplace I needed to go. In those days I was usually in a hurry, trying to cram as much as possible into my day. Having to wait for a train (or anything) did not set well with me.

One particular day I was driving with my sons: Brett, who was around 4, and Mike, two years younger. I was running late for something or other and, of course, we got caught by a train. I sat there fuming and ranting about stupid trains, and and why is this thing so long, and why can't they run them at night so they don't screw up people's lives during the day, and... honestly, I don't know what all I was going on about. After a few minutes, I heard Brett's clear little voice.
"Mommy, why are you so mad?" he asked. "Mike and I like the train. We like the way it sounds. Roll down your window so we can listen to it."
I sat there embarrassed, realizing that the adult in the car was not the person behind the wheel. My son was right. What was the point in getting upset? Being upset wasn't going to make the train go faster or keep me from being late. I was going to have to wait, pure and simple. It was up to me to decide how I wanted to spend that time; and there was at least one other choice besides being angry and miserable.

So I rolled my window down. And the three of us sat there, in silence, listening to the train. And in spite of myself, I enjoyed it. 
My wise 4-year-old boy is now a 40-year-old man. But I remember his words from that day every time I am stopped by a train. And unless it is raining sideways, as it sometimes does in the Northwest, I push the little button inside my car that lowers the window, and I listen.