Rehabber's Corner: REHABBING IN CHALLENGING TIMES

by Scott Rubin

The Perfect Storm - when the housing market and the lending market crash at the same time. I've always considered myself somewhat of a philosopher. Even my projects are less about nails and studs and more about how you feel when you walk into that room where those nails and studs might be.

Recently, I came back from a Frank McKinney Palm Beach Experience trip. For those of you who aren't familiar with Frank, he builds multi-million dollar estates on the oceanfront in Florida. I flew down with my mentor and seven other investors from Chicago. The purpose of the event was to raise money for Frank’s Caring House Project Foundation which, among other things, raises money to build homes in Haiti.
Like Frank, I consider myself a developer. Just like adults have an inner child, I believe that developers have an inner rehabber. We saw Frank's first $50,000 rehab and the site of his $135,000,000 development. Frank once sat with one of his homes for 19 months before it sold. One of my projects was built in 1899. I call it the Jewel of Edgewater. It was under construction for six months and has been on the market for 15 long months.

The history of the Edgewater area is amazing! Motion Pictures started next door in the Uptown area. Charlie Chaplain was signed with the first ever movie studio, Essanay Studios. They would put the stars up at the Edgewater Beach Motel. The Lone Ranger, Clayton Moore, grew up right around the corner from the Jewel of Edgewater. And the stagecoach used to stop right next door to the Jewel.
What I learned from Frank is that being a developer requires a tremendous amount of organization and focus. Though I am saying this in one sentence, it deserves many books of explanation and study. It is the most important line in this article. Frank has two books that are a great start and the proceeds, of course, go to his Caring House Project Foundation.

So what does all this mean? I'm sure when Frank started out, he also called himself a rehabber. It is the beginning stage. We grow into developers. You could say that rehabbers grow up and become developers. Some wise person once said, “there are no accidents, only inattention.” Just like a parent who is holding their inattentive childs hand as they walk them across the street, it is in this beginning stage I call rehabbing that it is the most important for you to surround yourself with people who can take your hand and guide you until you learn how to pay attention.
When I started out, I was like a kid in a candy store. I was having so much fun rehabbing and creating, that I wasn't paying attention. I forgot that there was this thing called a business that had to be run. There is no auto pilot switch in your business. You need to pay attention every day. You need to find good people that will pay attention for you and then you have to pay attention to them and what it is you are paying them to pay attention to.

One night at Frank's Palm Beach Experience, we were dining outside at the hotel. I decided to go back up to my room before the Coffin exercise that Frank was going to perform. I was walking briskly and ran into a full-length plate glass window. No one saw me, but a bunch of people heard the sound of me going nose first into the glass. Embarrassed, dazed and confused, I said I was fine and found the door as I headed up to the elevator. I rubbed my nose and realized blood was pouring out into my hand. I thought it might be broken considering that it was now located on my cheek. Two girls saw me in the elevator bleeding and asked if I needed a paramedic. No, I said, I'll be ok.

Fifteen minutes later, I was in the ballroom watching the Coffin exercise. Though several others and I contend that the plate glass window was an accident waiting to happen, it might not have happened if I was paying attention.
These are challenging times - particularly for rehabbers. Surround yourself with knowledgeable people, a mentor, and a mastermind group. If you get knocked down during a tough market or run into a plate glass window, pick yourself up, rearrange your nose and call your mastermind group or mentor. Two or more heads are always better than one.

Something else I share with Frank is my desire to give back. According to my parents, when I was very little, I was “curious”. That is the word two of the kindest people I know use to describe my taking apart and breaking everything! When I was about 9 years old, my Dad gave an old alarm clock that he was going to toss out. It didn't work. I took it apart and fixed it! From that moment on, I was fixing everything! I even fixed things I broke years before. My parents would have lists of things for me to fix when I would come home from college. I guess it was payback time!

That passion to fix things even spilled over into my relationships. One of my old girlfriends said stop trying to fix me…I just want you to listen. It is in my nature to fix things and I want to help people. I feel I am doing that in my Allergen Reduced Homes. I plan to start 5 Star Properties Charitable Foundation shortly.

I am not sure that I can rightly call myself a developer like Frank McKinney. In many ways, thinking about the organization and focus required to build a $135,000,000 single family home makes me see myself as a rehabber again. Even though I am in the process of restoring a $1,000,000 home in Lincoln Square, I believe that it will be me developing the organizational skills in my business and the focus that will ultimately make me feel like I've grown up into the developer that I truly want to be.

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Scott Rubin is an active investor and founder of 5 Star Property Solutions, Inc. and 5 Star Reconstruction, Inc. For more information, he can be reached at 847-579-4830 or visit him on the web at www.a5starProperty.com.