Well that was unexpected.
Let’s see. What happened in August? Weather was hot. Ate at Fuddruckers for the first time in a decade. Felt gross afterward. What else?
Oh, we bought a house.
Nice. Yeah. Didn’t see that coming.
In mid-August, the side project that’s been crushing my will to live for so long finally ended. Hopefully for good. Won’t know for sure for a couple months yet.
Then, literally two hours after it wrapped, we found the best apartment deal ever. Downtown Palo Alto, 1.5 blocks from the main drag. Spacious two-bed, priced $800 below market.
We applied on the spot. Signed the lease the next day. Score!
Then one week later, we had to break the lease. Because crazily, in a whirlwind, that same week, we bought a new house. Head still spinning.
Numbers first, then I’ll give you the play by play.
In August, booked revenue of $3,159, up +22% year over year.
Last month was down, so it feels good to be back up. But as I explained last month, continuing growth will inevitably get harder, so we must keep improving what we offer on our sites to earn that growth. Lots of new content in the pipeline to do this.
Now let’s get on to what happened this month….
1. Getting ready to move as new homeowners…and new landlords
OK, where was I.
So, you might remember from my previous income report that we decided to move closer to K’s workplace. We were looking for new digs and decided not to wait around longer for a house purchase.
So we started looking for places to rent. We toured several apartments but were disappointed with the quality relative to price.
Then, literally a couple hours after all my side project stuff wrapped up, we found what looked like a too-good-to-be-true apartment on Craigslist. Their phone was ringing off the hook. We bolted down there to view the unit. We applied, they liked us, and we signed a lease.
Thing is, we had also been eyeing a house that had just come on the market. MLS listing. Fourplex in a desirable, up and coming area.
We liked a lot about the place and, rare for the Bay Area, the numbers worked! They hadn’t started taking offers yet.
We’ve been in this situation many times before and had our offer rejected. We decided to throw our hat in the ring anyway. As with so many offers before it that failed, we didn’t have high hopes. Especially because we knew we wouldn’t be the high bidder, given the interest we saw during the open house.
But now, what about our lease? We figured, given how competitive the housing market is, we should still keep bidding even while renting. We’d deal with the logistics later, in the unlikely event our offer won.
So we wrote the offer. Then we won.
How did we do it? Tons of strategy, negotiation…and plain ol’ luck. I’ll write about the details in an upcoming post.
As expected, we were not the high bidder. Six offers total, at least half (possibly more) all-cash with 2 week closes. We were lucky. We even had a 3 day contingency!
But now, we had to try to break our lease. Yikes.
We called our landlord and graciously explained the situation.
Basically, we said we’d been searching for a home a long time – more than a year. We would honor the lease if they insisted on holding us to it. But we’d be grateful if they would let us out. Plus, it would be better for them, because we hadn’t even occupied the unit yet and ideally they’d want a long-term tenant and not have to turn the apartment after just one year. With us, there was a 100% chance we’d vacate after one year – more work for them.
They were not happy. I don’t blame them. But they understood and agreed that, given the situation, it was in both our interests to mutually walk away. So they let us off! Lucky again.
They had to find a new tenant first before they’d agree to release our deposit money. Given the price and location of the unit, I knew they could rent it in a day…it ended up taking them two days, but I’m sure they got a great tenant in the end.
Meanwhile, the fourplex we bought certainly isn’t perfect, but it checks enough of our boxes to be worthwhile. It’s a solid B+. Still hella expensive. And plenty of sweat equity we need to put into the property to reposition it and create value. But I have a vision for it, I know what renovations to do, and once we’re done the rents will jump. A lot.
Right now we’re still waiting to close. But we’re moving in ahead of time, in a couple weeks. I plan to write another upcoming post detailing our purchase and negotiation strategy, as well as our repositioning/remodeling process, to give an inside look on exactly how we create real estate wealth.
Stay tuned for that!
2. Growing traffic
Yeah. The housing situation took the bulk of time in August, so didn’t have too much time for much else.
August net new subs: 50
August Twitter followers: 1,801
1. Move in, start renovating…and look toward Austin
Escrow doesn’t close until early October, because our sellers are doing a 1031 exchange. But we’re moving into one of the units first early and I plan to start renovations there quickly.
Overall, remodeling the building will keep us busy for at least six months, maybe eight. So no more house hunting for a while.
But still, I plan to do a deep dive investigation and case study on how to search public records for off-market leads (divorce, probate, tax sales). It’s something I want to know deeply anyway. Then I can teach it here and also continue to look opportunistically for real estate bargains that come along.
Not in the Bay Area anymore, though. Too expensive to buy more property here. Instead, I plan to spend ALL my time focused on the Austin, Texas market. I foresee continuing to buy property…but going forward in Austin rather than the Bay Area.
I know Austin because I went to college there, and it’s one of the best kept secrets in terms of desirable cities to live. The real estate market knows this because Austin has been booming for years. And while it’s not easy to find good deals in the live music capital of the world, with cap rates compressing more and more each year, it’s certainly not as challenging as it is here in the Bay.
To that end…Got an Austin house to sell? Don’t want the hassle of cleaning, staging, marketing, and dealing with nosy neighbors?
If so, gimme a big Texas holla.
I can give you a good price to make it worth your while.
2. Grow traffic
You know the drill. Gotta buckle down on this. Didn’t move these numbers terribly last month because of this house thing. Now gotta get back to it! And get that list building machine cranked up higher.
September net new subs goal: 60
September Twitter follower goal: 2,000
See you back in October!