So I was feeling a bit crappy about the whole Kylie Ray situation. Sha and his wife Sonya were on their way to eat lunch and, being that Sha owed me after suggesting that awful Cheesecake Factory during my last Brooklyn trip, I went along. I'm still distancing myself from Sha as I promised at the beginning of the year, but I figured some good free food would make me feel good.
After some great pasta, we dropped Sonya at her job and drove around bullshitting for a while. We got to talking about how his business is going, and I pretended to complain about how tough it is to make it and all that bull. Sha said that he’s rethinking the barbershop he was working on in his Property Italia. I’ll put a link to that whole deal here and here so that I don’t have go into it again. But he said that business was slow, and the city grant he was hoping for to help finish the salon section of the barbershop fell through. He said he would have been better off renting out the space in the beginning instead of trying to run the barbershop business. Ha! I was right!
I talked before about not branching out into unfamiliar territory without knowledge of the business. Sha is good at getting units rented out. That’s his business. But I knew that going from landlord to business owner, in a field he knew nothing about, would not work at all. He has spent at least $30,000 - $40,000 on material and labor for that barbershop, but didn’t know how to run it so the only possible outcome was failure. It’s not that I’m happy that his business failed. What I am happy about is that I was right, which means that my core principles and theories are still good. It made me feel better about the Kylie Ray situation because I realized the reason I messed up was because I veered away from my core principles of being a landlord. The second those warning signs popped up with her, I should have leaned on my experience and thrown her out—regardless of what that would do to my plan of keeping everyone together in property Charlie. When a plan is doomed to fail, one has to cut his losses and lean on what he knows best. I didn’t and it cost me.
Like the barbershop, I consider Kylie Ray an experiment that failed. I tried a new concept (buying a place and keeping all the tenants in there until I have the money to throw them out, remodel, and rent out to higher quality and higher-rent-paying tenants), and it didn’t do too well. I have to throw out Kylie Ray but I still have the 3 paying tenants of property Charlie who can still make this concept work. All I need is one good tenant to replace Kylie Ray and I’m still good to go. Unlike the barbershop, my concept/experiment is in a field that I know, so I have a better chance of success.
With my core principles proven true by Sha, I feel much better moving on from the Kylie Ray situation. Roger Dodger knows what he's doing, but sometimes he takes stupid risks along the way. And that's okay. Knowing what to do is no longer my problem. Doing the right thing is my problem, and it's something I'll be working on. After all, what's the point of "knowing best" if I'm not gonna apply that knowledge when I need to? As long as I remember all the lessons I’ve taught myself in this real estate game and apply them when necessary, I should be fine.
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