Chapter 2

To say that Ken was spending all of his time thinking about what business he could get involved in would not be an accurate statement. Yes, he did have thoughts about that but he was also enjoying his leisure time now that his schooling was over. Swimming in the pool and catching some rays were occupying a good portion of his time.

One evening he was scrolling as to what to watch that was on the television and stopped when he came to a channel that had an attractive young lady talking about doing some house rehabbing. She was of average height with a nice figure, long dark hair, and had a pretty face which caught his attention. The rimless eyeglasses she wore gave her a sexy look. He wasn’t interested in what she was saying as he was only interested in watching her.

Ken was having thoughts about her and couldn’t help but wonder how good of a lover she would be. He did know he would like to be the one to find out the answer to that question.

He watched three consecutive shows of her that were on the HGTV channel. Ken then had the thought that maybe he should be paying attention to what was being said about what was going on as there seemed to be a good buck being made in doing this house rehabbing. He continued watching other shows on HGTV in which rehabbing was being done and could see it involved some high-end homes but there were also some low-end homes being rehabbed. It seemed that the price of the home was dependent on what the neighborhood or town was where the house was located.

The more he thought about doing this rehabbing he had thought that this could be something to get involved in since Austin was a growing area and houses were in demand. He knew he had the money to do it but he also acknowledged at the same time that he didn’t have the required expertise.

Ken remembered a conversation he had with Andy Kellman a fellow student and fraternity brother about a month before school ended. Andy had mentioned that his uncle, Ben Kellman, was going to be out of a job. Ben was a property claim supervisor for a large insurance company that was closing their Austin Claim office and asking some of their inside employees to move to Dallas where a mega claim office was being established. Ben for several reasons did not want to make the move so he was going to be looking for other employment.

Ken phoned Andy to ask for the contact information for Ben. Getting that information he phoned Ben and briefly explained who he was and what he was looking to do. Ben agreed to meet with Ken for lunch.

At lunch, Ken knew in a short time that Ben had the knowledge and was the man he wanted to have in this business of rehabbing houses. Ben was in his early forties and gave the appearance of confidence when he spoke.

Ben said with him leaving the insurance company he was initially thinking of becoming a licensed home inspector but when he learned what the requirements were to become one, he eliminated any consideration of doing it. He could get a job in adjusting claims but that would need to be with another insurance company as he would feel uncomfortable in doing that with his prior company since it would be a look on as a demotion.

Ken explained what he wanted to do was to purchase a home at the right price that needed some TLC, and after doing some of that, selling the home to make a profit. The purchase price of the home plus the cost of the rehabbing needed to be kept as low as possible which would result in a profit when the house was sold. Ken wasn’t looking for Ben to do any of the physical work, only to be the Property Manager, a PM, in securing the workers to do this needed work and supervising them.

Ben did ask Ken some questions which he tried his best to answer and admitted that he was a novice at doing this rehabbing. Ken did say he had spent time thinking about what was involved in doing something like this. The big and somewhat anticipated question Ben asked was what would be his compensation for doing this?

“I want you to have an interest or incentive in making any house that we rehab for it to be as profitable as it can be. What I am saying is that I want you to have some skin in the game. To do that you will get seventeen percent of the profit when this house is sold. I would like to avoid using a realtor to sell this completed house so if you, your wife, or a friend would find a buyer by maybe advertising or having an open house, the fee for doing that would be an additional three percent of the profit.”

“I figure on a home we rehabbed if we made a fifty thousand dollar profit and if you found the buyer that would be ten thousand dollars to you gross. I will send you and who you hire a 1099 at year-end for the sums I pay. You will need to handle your taxes and FICA out of that as you do want to be eligible for Social Security and Medicare. I will consider you and whom you hire to be independent contractors. Of course, you in the process of doing this rehabbing will be billing me or asking for reimbursement of your costs in doing this rehabbing.”

“Now, since you are supervising the work and not doing it, you might want to consider handling two projects at any given time which would double what you are making. That is up to you to decide if you want to do that. What do you say?”

Ken could see Ben was thinking about the offer. He then extended his hand to shake and said, “When do we start?”

“As soon as I can check with a realtor and find us a home to do the work. Before I offer to buy I want you to inspect the home and agree to its purchase as well as estimate what the cost will be to do the rehabbing. The realtor will help in giving an estimate with us having done this projected work as to what we could sell the home for.”

There was still time left in the day which had Ken stop by Ray Harvey’s office. He told Ray he wanted to set up a corporation for this new business he was going into. Ray introduce Ken to Bob Freeman a junior associate and said he could do that for him and could also handle any real estate transactions he gets involved in. The KenMi Corporation was the name Ken decided on for the corporation.

The next day Ken stopped by Albany Bank and with a large deposit, he opened a savings and checking account in the name of this new corporation. While he was there he asked to speak to the head of the mortgage department and was directed to Laura Fields. He asked her if they ever have any house repossessions to which she said while they do their best to avoid that from happening every so often it does happen. When it does happen they just give the property to a realtor to sell as the bank is not interested in selling these homes and wants them off the books as soon as possible. Ken asked her if she could give him notice when they have a repo and maybe he would buy and save them the cost of the realtor commission. Laura said she would do that.

He now needed to find a realtor to see if he could find a home to start this business. As he was driving he saw a building that had a sign in front of it that said Harris Realty. He parked his Ford and walked into this realty office. The receptionist asked if she could help him and he responded saying he was looking to purchase a home. The receptionist asked him to take a seat and she would have someone help him.