Sunday, March 3, 2013
Blog Post 1
Conducted by: Josh Hovannisian
Out of all of the potential career opportunities in real estate, becoming a full-time investor is one of the riskiest. There is almost an unlimited potential for both gain and loss. I conducted an interview with Jacob Sarabian, an investor from Fresno. He deals in low-income housing throughout the central valley, and has been investing and managing property all of his adult life.
How did you get started in Real Estate?
"My family has always been involved in real estate in one way or another. My grandpa was a farmer who owned land and my dad did the same. They mostly dealed in agricultural land, but I got much more into rental houses. Real estate always interested me much more than farming ever did. I started out working on the few rental properties that my dad had, fixing them up and getting them into better conditions, then I moved onto managing the properties. After years of doing this, and working on the ranches and farms, I knew that I wanted to get into rental properties. I then started buying property of my own and now it is what I do full-time."
What type of education is needed to do what you do?
"No formal types of education are really needed, I guess, because anybody could buy a house, but there is a lot to know. You have to know about codes and restrictions and permits that are required. Also, the training never stops because laws change and real estate requirements change always. I had my formal education in law, so I guess people in the real estate field could come from any educational background. Most of the actual real estate education that I have received either came from my dad, or experience. Experience is something that can’t be taken lighltly because without experience, I would make the same mistakes over and over again. Like, for example, when I was young, I would expect a property on the market, put in my offer, and wait to see if it gets accepted without looking at any major details of the property first. You would be surprised, for example, how easy it is to make a purchase on a property that seems fine, but turns out to be a complete waste. There is a lot of research that must be done in every transaction, because, after all, every transaction is very expensive because we are dealing with actual homes."
Could you please describe your typical day as a real estate investor?
"It is always important to get up early. Waking up early and checking the market is vital. It really is like “the early bird gets the worm.” If a house pops up on the market, I want to be the first to know about it so I am always trying to find it first. As soon as I see something that interests me I drive out to inspect the property closely, and if I like it, I will put in my offer and if I’m lucky, I could be the first offer and it may get accepted right away. There are many days, however, that I do not find any property worth buying and waking up as early as I do doesn’t help me out, but the days that it does benefit me helps me much more than waking up later everyday would hurt me. Besides buying and selling property, the main portion of my day involves managing my properties. All of my tenants have my phone number and they will call me if there is ever a problem and I will either send somebody out to fix it, or do it myself. Also, there is a constant need to be available because every day, I will usually have about 8 workers fixing up or maintaining properties. I am always on call, and will visit the work sites a couple times a week. Also, I must keep organized who has payed their rent. There is a lot of bookwork to be done every single day."
What types of investment properties do you focus on?
"I tend to focus on low-income housing. I do not deal with any higher income areas or big money house flipping. I will look at properties anywhere from Madera to Tulare and all of the smaller towns in between and of course Fresno. That is another big thing about my job is that you are always on the road and on the go. Even when not on the road, I have to be ready at an instant to go on the road if needed. And even more than that, my phone must always be with me. I would say that my phone is the most important tool that I own. Whether early in the morning or late at night my phone is ready to go. Obviously, there are very few instances where my phone will go off late at night, but I’m always ready. That is one of the best parts about doing what I do. As long as I have my phone, I am working. I could make time to eat a good lunch, work out, relax, or anything for entertainment during the day, as long as I have my phone with me."
What does it take for a person to become a professional real estate investor?
"First of all, it does take having some money in order to start up. You cannot buy property if you do not have any money. It also takes patience. It may take a long time to find a house or for a house to get fixed up and you will have no steady from of income until you get it rented out. Vacancies are also something to worry about. It really is hard to go into real estate investing willy-nilly because it does require that you have some sort of foundation in the industry. Me, for example, I had my dad and his connections and I had previous experience managing his properties. That is why so many people will look into investment properties as simply an investment, rather than their primary form of income. What I like about doing investing for a living, is that the potential is nearly unlimited. There is no top, but rather someone could climb higher and higher. At the same time, someone could fail, and lose everything."
What was it like for investors when the market crashed and the real estate bubble burst?
"There were a lot of people with a lot of problems when that happened. I was hit pretty hard by it myself because of the market prices of homes. I mean, before the bubble burst, these properties were worth three figures, easily, and all of a sudden they were worth no more than $50,000 and nobody was willing to give them a second look. What hurt a lot of people is foreclosures. Banks would give these huge loans to people because the market appeared so strong and then when the market fell, people weren’t gonna pay these huge loans on house that aren’t worth half of the amount so they just let the banks take it. Now it is really hard to get a good loan because banks are so cautious. It is getting better though."
Would you recommend being a real estate investor to others?
"Well I think it all depends on the person. If it is something you want to than I think definably because it is a fun and exciting field to be a part of. It’s obviously not for everyone and there is a lot of risk involved. I love what I do and I always have, but I have been doing it before I was old enough to really get into it, so I think that someone who wants to do this full-time should have some sort of experience doing something in real estate before so they know what they are getting in to. "
I would like to thank Jacob Sarabian for allowing me to interview him and for providing me with helpful information regarding real estate investing.