Galveston

In 2008, Hurricane Ike, a Category 2 hurricane, caused significant damage to the Texas Coastline, including Galveston and surrounding areas. This natural disaster led to the flooding of homes and properties, resulting in many owners being uninterested in rebuilding. However, my Uncle Tony, who had been a Real Estate Investor for decades, saw an opportunity in the aftermath of the hurricane and decided to invest in the island for our first real estate projects.

During this time, Scott Byer and I were newly married and I was focused on building my career in Advertising and Marketing. Although I was initially hesitant about becoming a Real Estate Investor, I had the chance to learn from my aunt, who had experience and knowledge in the field. She was often stressed and would vent to my mother about the financial anxiety that came with being a real estate investor. Despite my initial fears, I decided to partner with my uncle on one fix and flip project.

In this particular project, Scott Byer partnered with an individual we met at a Real Estate Investing Club. This person had a construction contact, his roommate and best friend, who would handle the construction work. While our partner had some cash to invest, he had bad credit due to personal reasons. We decided to contribute our own funds through a hard money loan. Initially, the deal seemed promising on paper, but we encountered several challenges along the way.

Unfortunately, our partner had a kidney transplant before the project started, and his body rejected the transplant. He was in and out of the hospital during the entire project and eventually passed away. Looking back, I'm grateful that his name was not on the deed, as probate would have complicated matters further.

After our partner's passing, his friend/roommate/contractor began taking advantage of the situation. He started stealing items that were installed in the property, such as windows, doors, and trim. We also faced issues with crew members not showing up, which caused significant delays in completing the project. However, despite these setbacks, we managed to finish the home and listed it for sale. Due to the market still recovering from the crash, we had to pivot and turn it into a rental property. Its proximity to UTMB attracted interest from staff, interns, students, and medical professionals.

Our first tenant was an administrator at the school. Although we were desperate for a lease at the time, we should have conducted more thorough research on the tenant's quality. The first year went smoothly with no major issues. However, during the renewal period, the tenant missed a payment, changed her phone number, and emails sent to her were returned. Eventually, she abandoned the property, leaving approximately $10,000 in damages and repairs.

After repairing the property, we experienced a positive streak of tenants. One family completed their residence at the school, and we had a rotation of medical students who would shuffle in new roommates as one graduated. Initially, our monthly profit was around $250, but with each new lease, we were able to increase the rent in line with the market, resulting in a significant increase in our monthly profit.

When the market started to boom after the Covid pandemic, we reevaluated whether it made more sense to sell the property or continue renting it out. Rent increases were not justified, but tax appraisals and insurance premiums were on the rise. Ultimately, we decided to sell the property and reinvest the profits through a 1031 exchange. Although it was bittersweet to say goodbye to our first investment after owning it for nearly 13 years, we received a full-price cash offer that we couldn't refuse. Little did we know, the buyer invested maybe $10,000 into the property and made an additional $80,000 profit. The market was truly extraordinary during that time.