I’ve known Andy since he was a teenager, and Cathy has known his mother, Sally, since before Andy was a gleam in anyone’s eye. I’ve always liked him, and it’s not always easy for me to like teenage boys. But Andy has been an earnest young man for as long as I’ve known him — a firm and fixed shape to his face and firm and fixed ideas in his mind. At fourteen he had a quiet intellectual confidence that would have been a credit to a man of thirty.
When he was a senior in high school, he read something I had written and convinced his English teacher to invite me in to speak to the class. I gave them ninety minutes on notational systems. That might sound dull, but in fact it is the naked essence of human social interaction. We started with learning to multiply in Ancient Rome, took a grand Mediterranean cruise of cognate terms, touched upon Shakespeare and Plautus, and brought it all back home to real life in modern America. I lecture on real estate all the time, but I think that day was the most fun I’ve ever had talking to a class.
“This is the life of the mind in action, as it is actually lived. It’s not some desiccated notion trapped in a dusty book, it is an eager pursuit of new knowledge by reference to what is already known. The more you know, the more you are able to discover.” I don’t claim to have made a lasting impact on those kids, but for ninety minutes, at least, they understood that there are reasons for learning apart from passing a test or getting a job or staying out of trouble with your parents.
When Andy graduated from high school, he elected to join the Army. Sally had money set aside for his college education, but Andy reasoned that if he served in the military, Uncle Sam could pay for college and he could then use the money Sally had saved as investment capital. It was peacetime when he enlisted, so the ratio of reward to risk seemed manageable. So Andy went off to Fort Bragg to train as a paratrooper — just in time to go off to Iraq to fight the War on Terror.
We wrote letters to him and sent goodies and Andy wrote back, telling us how he and his platoon mates would build candy-pults to put on their HumVees so they could share all their surplus candy with the children of Baghdad without letting them get too close. He came home uninjured, thank the lord, and he was an even more serious man, if that were possible.
Earlier this year, Andy called me to talk about buying a house. He and two roommates had been renting an apartment, and he thought it would be a good idea for him to buy a home and rent the guest bedrooms out to his roommates. I put him in touch with Logan Hall at SallieMae Home Loans, and it worked out that Sally and Andy would buy the home together, with Sally as a non-occupant co-signer.
We spent a long time looking at houses near Arizona State University, and we lost a couple we would have liked to have gotten. We ended up with a very nice three-bedroom home near the Fiesta Mall in Mesa, Arizona. The refrigerator, washer and dryer conveyed, which was important, and there was a two-car garage, which was very important. The house backed to a public school playground with only a chain link fence separating the properties, so we paid to install a block wall.
During the whole time we were looking, I was able to communicate a great deal of real estate information to Andy — how to identify good properties, what works best for rentals, what works best on resale, tenant selection and landlord/tenant policies generally. One of the huge — and possibly underrated — benefits of working with an experienced Realtor is reaping the benefit of all that experience. I remember every house I’ve ever been in, every story I’ve ever heard. I can intone lyric histories of particular neighborhoods, like Homer the Greek, in dactylic hexameter. I would have done this for anyone, but it was treat to do it with someone I like and admire as much as Andy.
I even wrote about him. As we were wrapping things up, this appeared in my Friday column in the Arizona Republic:
I’m helping a young friend buy his first home. I’ve known him since he was in high school. I admired his decision to defer college for an arduous tour of duty in Iraq. He’s back in school now and he and his mother are buying a three-bedroom home to use as his staging ground for his assault on ASU.
I think this is very smart by itself, but here is the stroke of genius: He is going to rent his two spare bedrooms to other students, using their rent to help amortize the property. The house will be his starter home, but it will also be his first foray into real estate investment.
Here are some ideas I want to share with him that may also prove to be of value to you:
1. Form a limited liability corporation to own the property. God forbid something tragic should happen in the home, but, if it does, you want to limit your liability to the home itself, not the rest of your assets.
2. A verbal agreement isn’t worth the paper it’s printed on. In Arizona, a lease of less than 12 months does not have to be in writing, but if you take your verbal lease before a judge, he will treat you to equally verbal laughter. A written lease protects both parties, the landlord and the tenant.
3. The past is prologue. If a prospective tenant cheated his last three landlords, he’ll cheat you, too. Credit and rental history matter, and the most important part of being a happy landlord is mastering tenant selection.
4. Pay your own rent. Since the home will be owned by an LLC, pay the corporation the same rent your tenants are paying. If there is a surplus on costs, you’ll be able to use it for maintenance and improvements — or as capital for future investments.
Owning a rental home is the smallest of small businesses — but it is a business. Treat it that way and it will enrich you now and for years to come.
Kind of pushy and preachy, but I have an avuncular interest in the matter.
In any case, we closed on the house and Andy and his roommates moved in. We got the block wall built — using Arizona Hurricane Fence, which is not only the best but which is owned by Joe Rosell, whose house we sold a couple of years ago. Sally wrote us a sweet testimonial, sweeter still because she made note of everything I had been trying to do:
I have been astounded at the levels of service that you have provided me and my son as he worked on purchasing his first home at age 23. Your advice and attention, teaching and mentoring have been invaluable. You’ve made a seasoned home-buyer of him with all the education provided in the course of the project. Your high ethics prevented possible mistakes and have resulted in a home that appears to meet his every need as a live-in owner, property manager, landlord and my needs as an investor. Your service is over-the-top and I will be happy to refer others to you whenever the chance arises.
In truth, the transaction itself was fairly routine. But it was a treasure for me, both because I go to help someone I’ve known and respected since he was quite a bit shorter, and because I feel I owe a debt to Andy for his service in defense of this country. The life of the mind is peopled by heroes, but it’s not every day that you get to work with a hero in real life…
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Todd Tarson says:
That is a very nice article. Well done.
And thanks Andy for your service!!
August 20, 2006 — 11:45 am