Life Can Be A Dirty Fist Fight — Stories and Lessons from a Real Estate Developer

by Jack Murphy || July 27, 2017

The old woman squatted on an overturned milk crate with her elbows on her knees. Weeks of junk mail covered the entryway floor as she guarded her empty run-down home. She wore dirty sweatpants and someone else’s t-shirt along with 70 years of hard living. Today, she fought her dementia and memories from a life which had expired years ago. This was her last stand. I came to claim my new asset and she dug in to defend it.

I bought the house from her son, a reasonable middle-aged black man who knew the time had come to cash out and put mom in a home. He signed the papers and collected the check in the morning, it was a more money in one day than he could earn in a decade. $400,000 in cash should be enough to soothe the pain he felt seeing his deranged mother fight the white man in her old home. When he tried to remove her, she kicked and clawed at him. She couldn’t let go or understand what was happening. She just saw an invader at the door and went full momma bear on me.

“I ain’t letting no white devil take my house. Is this the real estate man you was tellin’ me about? I told you not to do nothin’ with that man. He’s a bad man. They’re all bad man. Ain’t got nothing good about him at all. Nothin’ good. I ain’t going nowhere. You gonna have to call the po-lice to get me outta here. No sir. No way. I ain’t doing shit!”

When I bought the house, I had no idea the guy’s mom was still around. It just seemed like an easy transaction, he wanted to sell, I wanted to buy. Totally normal. It was the typical property I liked to get: poorly maintained with good bones, needing complete renovation, and in a transitioning neighborhood. You could call it gentrification, but I just saw it as time moving by.

The neighborhood had gone through generational cycles before, each time bringing disruption. First, the Jews lived there, raising families, running businesses and establishing the Columbia Heights neighborhood as a desirable location. But then the riots came in ’68 and they were run out of town. After Martin Luther King was killed, the blacks here burned and looted half the town. The main commercial strip, 14th Street, was gutted and set ablaze. White flight ensued and the neighborhood changed.

Black families moved in after that. They too raised their children and built a community, but the commercial district never recovered. Burned out vacant properties lined the main street while more and more people crammed into the already small town houses. Aunts, uncles, grandma, adult siblings, and distant cousins lived on top of each other. Despite all these people living there, no one invested in the homes and they remained stuck in the 60’s, antiquated, run down and crumbling.

Over time, the crime got so bad the only upgrades were to weld security bars on the doors and windows. Not much of an improvement. Even the internal roof hatches got blockaded. Criminals roamed free, and people were worried they’d break through the roof and come crashing into their homes. The residents were caged in while the muggers, home invaders, and drug dealers ran amok.

Eventually, everyone got old and started to die. And that’s when the changes started again.

Homes which were bought for ten thousand dollars in 1970 were now worth hundreds of thousands, sometimes even a half a million. Despite being unlivable to most people, these properties represented opportunity and hope for developers like me. The death and decay of this community meant chances for big money and a bright future for another. I guess that’s what they mean by gentrification. Even though the old people walked away with a fortune, they were angry.

Time, crime, and neglect whittled away at their community until there was no choice but to leave. The new people had already started coming, driving up prices and taxes, bringing new ways of doing things, and flaunting their relative wealth. A meticulous garden and fresh paint wedged in between broken windows and trash littered gravel ‘yards.’ I can imagine what it’s like to be shamed by the obvious comparison. That doesn’t sound like home to me.

Getting your hands on the right property at the right price was a dirty business. It takes a certain kind of person to work that deal. If the owner didn’t die, then some other reason usually forced them to sell and sometimes sell quickly. Maybe they failed to pay their taxes and the city was about to auction the property. Or maybe an unscrupulous lender gave them a loan they could never pay back and foreclosure was imminent. Or maybe the son tricked his mother into giving him power of attorney so he could sell the house and steal her money.

Finding those situations and capitalizing on them means interacting with people in crisis overwrought with emotion. And sometimes it was just plain shady. We call people who get properties this way “wholesalers.” Wholesalers were the ones I generally bought from. I didn’t want to get into people’s personal lives or take advantage of them when they are weak, so I used the middle man. But this time, somehow, I ended up walking right into the worst kind of family drama.

“Momma, we sold the house, just like I told you we was gonna. It’s time to go, momma, it’s not your house no more. It’s not our house no more. You sold the house momma, you sold the house to this man here. He owns the house now. Momma, it’s time to go.”

“I ain’t going no where! Imma sit right here in MY house. You can’t tell me this ain’t MY HOUSE no more. This shit here is MY HOUSE. I don’t wanna sell the house. I never wanted to sell the house. What did you do with that real estate man? I told you not to talk to him!”

The real estate man must have been the wholesaler because I’d never met this family before that day. I assume he came through and worked a deal with the son, and in turn flipped it to me. You never know how it’s going to work until you get to closing. The wholesaler’s don’t usually show up because it’s always testy. Everyone feels a little ripped off. The seller sees how much I’m paying the wholesaler, and realizes he could have sold for more. And I see how little the wholesaler paid, showing me once again if I was willing to get my hands dirty I could generate more profits. The only one who really makes out is the wholesaler who basically buys and sells a property without ever using any money. Ever wondered who puts up those “WE BUY UGLY HOUSES” signs? It’s the wholesalers. They get paid for getting dirty.

“Momma it’s time to go, momma lets go. It’s all over. It’s all over.”

Finally, the son gave up and left. It was just me in my suit standing in the doorway and this poor old lady sitting on her milk crate refusing to leave. I had little choice. She was trespassing and it was time for us to get to work gutting her home and memory completely.

I called the police. A white cop showed up, checked my paperwork, and began the sad task. He tried to talk her into leaving, but she wouldn’t go. My guilt kicked in and I had to leave just as the policeman started to remove her by force. I couldn’t watch him drag this old lady from her home against her will. That dirty work was too dirty for me. I felt bad, but what could I do? This was time passing her by. It was the end of her life and the end of this community’s life. And I had money to make selling a renovated home to a young white family or couple of gay guys.

I guess this is what they mean by gentrification.

That true story has stuck with me for almost 15 years. I can still feel her confusion and pain, the son’s lament. I can still hear the quiet suffering of the dying community and the clanging hammers of change. However, contained within this sad scene are several nuggets of wisdom.

Here’s what I learned:

1) Communities are not forever.

We all long to be a part of a meaningful community. This can come in different forms. The obvious example is a residential community with kind neighbors and helpful kids. One where you can share a beer with the guy next door while your youngest rides her bike. But community can also exist based around specific topics or activities. My Muay Thai community has some of the best guys I’ve ever met, guys who would do anything for you. And the community I’ve built around my son’s Little League teams offers endless opportunities for service and leadership. What they each of have in common is their fragility. A community must be built and then maintained, otherwise it will sadly fall apart.

Take time to invest in your communities and watch them flourish. Neglect them, and see them die.

2) Change brings opportunity.

Opportunities in real estate, business, and life come when big changes reorient the playing field. Having the vision to see what comes next is how winners get ahead, while losers look up one day and ask, what happened? As Wayne Gretzky said, don’t go where the puck is, go where the puck is going to be. We can apply that across our lives. Only you know your circumstances enough to discover the hidden opportunities of change, so the main idea here is — don’t let change scare you, seek it out and find the new path forward. Some people saw a decaying neighborhood with run down houses, but I saw a chance to make money and build something beautiful. Believe me, I had plenty of investors turn me down before I found someone who shared my vision. Persistence paid off in the end, and today my real estate portfolio continues to flourish.

3) Sometimes life can be dirty.

I never wanted to take that woman’s home away from her. I was simply paying a man what he wanted for his asset. But behind the transaction was a world of pain. A world I didn’t want to see. Before then, I guess I just pretended everyone was a willing happy seller, but that moment on the porch watching the cops start to drag the old lady away showed me the other side. Life can be hard and shitty sometimes. Doing things the “right way” won’t protect you from that. Follow your moral compass when times get tough. Stay true to your values and once the grimy parts are over, you will still be proud.

The experience with the old lady and her son, their shared home, and the end of their community largely soured me on residential rehab work like that. The wholesalers got the best end of those deals by and large, and profits were more about buying cheaply than selling for top dollar. So, instead, I moved on to commercial real estate, where adding value comes from professional work and solving complicated problems. Rather than buy a property from aging locals or dirty wholesalers, I now work with commercial brokers and investment groups. But that doesn’t mean the game has changed all that much. They may be wearing suits now, but the dirty parts still come, this time with legal action and capital decisions instead of family drama and broken homes.

Because make no mistake, life is full of conflict no matter what you’re doing.

In order to be successful, beyond having talent and vision, you gotta have the stamina to win these conflicts. There will always be someone looking to take what is yours, move you out of the way, or out-right fight you. The winner is usually the one who can endure a war of attrition. And to do that you gotta be strong.

Get your mind right. Get your body right. Get your life right. So when the time comes for conflict, you can shoulder the burden and come out as the winner you rightfully are.

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Originally published at jackmurphylive.com on July 27, 2017.