With the RPOA fast approaching its 50th anniversary, we thought there was no time like the present to highlight someone who remembers the RPOA in its infancy. For this quarter’s Member Spotlight, we sat down with early RPOA member Steve DeKoster to discuss his success as a landlord and how the RPOA helped with that success along the way.
In 1979, Steve was working in retail management. While the retail market had begun slowing down, he noticed that the real estate market was really thriving. Thinking he could take advantage of this booming economy, he decided to get his real estate license. In the days before Zillow and Trulia, being a Realtor® was the only way to be able to get in on the good deals, as all of the real estate listings were privatized. Steve became licensed in order to gain access to those listings in the hopes that he would be able to find properties to buy and flip. Shortly after becoming licensed, he did just that. Steve purchased a small home on Quigley St. in Grand Rapids, Michigan for $16,000 with $2,000 down on a land contract. He flipped the house within 3 months, selling it for $23,000 and making over $6,000 profit. That led to a revelation in Steve’s mind that all he had to do was “wash, rinse, and repeat” this cycle multiple times in a year and he would be making more than double his salary as a retail manager.
The economic recession in 1981 drove the interest rate to 17% on mortgages which made buying a house something that many people were unable to do. This created challenges when trying to buy and flip for a profit. The only other reasonable solution was to rent homes since people couldn’t afford to buy at the steep interest rates. This caused Steve to go from flipper to landlord. Since purchasing his first property, he had increased his portfolio to three properties that he rented out as single, double, and triple units. He worked that up to 12 properties in about nine months. Looking to expand on his newfound success as a landlord, he was surprised when a 23 unit property fell into his lap. He thought it was something he would never be able to do–managing a property as large as that– until it was pointed out to him that at the end of the day it’s all just numbers. The bigger property was the same business – wise as the small units he was renting out, just larger numbers. After talking with his wife, they decided to go for it, and they bought the unit. The rest is history!
Starting with 12 units in 1987, Steve increased his portfolio by 10x, to 120 units in 5 years. He personally managed these properties as well as adding some commercial property along the way. Steve has helped negotiate deals as a real estate broker for many people during his career. His personal portfolio has approached 10 million in total value of purchases and sales over a number of years. The most money Steve ever made on a deal was on a zero down deal that provided a gross profit of $50,000 in six months. He stresses that while there is potential for profit in a short term flip, most of his success has come from investments over time. One of Steve’s most recent successes was being featured on HGTV for a tiny home project. With the rise of the tiny home, Steve saw it as just one more way to adapt to the market and to use the trends of the time as a means to success.
Steve’s favorite part of the business is negotiating the deal. “Putting agreements together that meet the needs of both buyer and seller is very satisfying. The most difficult part of negotiating is waiting. I once waited 11 years to close a deal on one property. Fortunately I can multitask.” he says. Despite all of his success, Steve has made some mistakes along the way. One of the biggest mistakes he can recall is early on, buying only based on price and terms without consideration as to whether the building would fit into his portfolio. Buying buildings that needed a lot of work “just because he could” ended up being a large drain on time, energy, and funds in the long run. This diluted efforts to improve his overall portfolio.
One of the biggest influences in Steve’s career and his favorite real estate guru is Jeffery Taylor, aka, Mr. Landlord. “When I was president of RPOA, he was the first of the nationally known speakers I invited to one of our early conferences. He offers a wealth of very practical tips and advice.”
As an early member of the RPOA, Steve had a few thoughts on how not only being a member but also being on the board has helped him over the years. He stresses the advantages of the RPOA for those just starting out in real estate and states that joining the RPOA is an invaluable way to meet others in the business that are willing to share their experience. Finding mentors and learning from their mistakes is one way to avoid pitfalls and to ensure success as a Realtor®, investor, or landlord. “A membership with the RPOA is one of the best ways you can invest in yourself”. Beyond being a member, becoming a board or committee member provides even more opportunities to participate and learn from the best of the best; the people on the top.
When the RPOA was starting out, it was Steve’s vision to professionalize the association and to hire a director. It took 10 years, but they finally did it and were able to bring Clay Powell on board as director. From there, they worked to make the RPOA more beneficial to its members, and expanded with educational tools and classes, and professional lobbying. They were able to make the RPOA a more proactive and less reactive organization. The RPOA has since worked to give back to the community and to self-police landlords in the area, making it a respectable and admirable company.
Steve’s parting words to people just starting out in the business are to always believe in yourself. “Never think ‘there’s no way’”, he says. “Always believe you’ll accomplish your goal, and you will find a way to do it.”