The High Price of Hope

On June 7, Creative Loafing did an article on “The High Price of Hope”; the article talked about a man named Angel, who put himself in a financial bind in Southwest Atlanta. This is something that happens to a lot of investors. As an investor I also took a financial hit, and this is my story.

Angel’s focus was not on the alligators but was on the ether of Adair Park, the beltline, and a cheap house. He bought this shell of a house that was in a crime-ridden area with a huge number of vacancies, and prostitution for $14,000.

Angel had a lot in his favor, he was very resourceful. He knew people who worked on the city council and the neighborhood association. The architectural plans he purchased made it through code enforcement, city planning, and the bid from the contractor to build his vision. Angel is a young man, and in the real estate business, time will solve all problems. When we tap into using our relationships that will minimize our risk and maximize our potential profit are invaluable. When we are able to weather the storm through proper planning and realistic goals we will succeed.

The problems that Angel did not think about was crime, his lack of experience, budget, the house being historical, not spending the time to plan, securing the money for repairs, along with the long term financing, and the Fulton County Government. Let’s talk about the things he should have controlled; if he had developed a step by step plan for 60 days this would have saved him from using all of his finances and many resources he had, due to his lack of planning, experience, money, stress, and becoming overwhelmed. Angel had no control over a few of the problems he encountered like crime and government.

Angel should have purchased the land and demolished the house. He should have purchased architectural plans which fit his needs and the lot. He should’ve gotten three contractor bids on the plans prior to the closing. He should not have tapped his 401(k) for the purchase without any back end financing for the actual renovation or rebuild in place.

Relationships that fill in the gaps between our education, experience, and financial resources prevent 80% of the failure. Work with people who have been there and done it. The bottom line finance, health, relationships, and experience are resources that should not be wasted. Knowing what the risks are by developing your resources will stop you from falling into Angel’s shoes. If you only hope the chances of success are low.