John and Corinne Tesh’s distinct and complementary skills have made Citygate Homes a leading turnaround specialist. Teaming up with HomeVestors has turbocharged it.
By LINDA WIENANDT
John Tesh started out the way many real estate investors do—as an “accidental” landlord. As a professional photographer back in the ’90s, he was faced with the prospect of having to relocate his studio due to a planned sale of the building in which he leased space. Tesh ended up buying the office building himself and then oversaw the management of the property, which had three other tenants in place.
“You could say I was really lucky because I really didn’t know what I was doing,” recalled Tesh, who now owns and operates a hugely successful HomeVestors franchise, Citygate Homes in Greensboro, N.C., with his wife, Corinne. “But I was very fortunate in the properties that I bought. I was self-taught, and I ‘bought right.’”
The healthy cash flow from his photography business enabled John to invest in a number of duplexes and single-family homes as well. At one point, “I ended up buying a whole street,” he said.
The self-teaching has been supplemented over the years with seminars, boot camps, mentors, real estate investors association programs and what Corinne calls the “steroid” boost of resources and support they experienced when joining HomeVestors at the end of 2014.
Never Stop Learning
“Any education is a good education,” and the more, the better, John said. The couple sings the praises of Triad REIA, noting that it and other local real estate investors associations are prime places for learning from those who’ve been in the trenches and will share first-hand, practical solutions and advice. And they credit HomeVestors, with its marketing and national branding campaigns and one-on-one local coaching, with putting their business on the fast track.
“We are where we are today because of all the training,” said Corinne.
Where they are is at the forefront of a frenetic residential investment scene, with Citygate Homes seeing more business than they ever imagined.
“I think all told, in the couple years before we joined HomeVestors, we were in maybe half a dozen homes talking to people about buying their houses,” John recalled. “With HomeVestors and its marketing help, I’m in two or three houses a day now. A day! It’s crazy.”
Their goal is to close on 40 houses in the next 12 months. “And we will achieve that,” John said, confidently.
A Winning Combination
The couple brings distinctly different and complementary backgrounds and skills to Citygate Homes, which they started in 2012.
John had “semiretired” after selling his photography business in 2001 and was enjoying good cash flow as a landlord from his residential and commercial rental portfolio.
Corinne, educated in interior design, came from the corporate world, having worked for a number of major New York firms in construction management and project management. She moved to North Carolina in 2005, meeting John a couple years later.
“We knew we had a good blend of talent,” she said, “and had been talking about—somewhat of a bucket list item—our desire to fix something up and make it beautiful.”
Smartly, they waited until the great market downturn had occurred, and started flipping houses after they got their first property under contract in 2013.
Business in the first days of the new company was fun, “but it was not as busy as we would have liked,” Corinne said.
Their marketing efforts were sporadic, and once they found a project, they tended to give it their complete focus rather than maintain a consistent branding effort, “which is bad!” Corinne acknowledged.
Let’s Make a Deal
A chance attendance at a “Dealmakers” session in the Greensboro area led to the Teshes’ reversal of fortune. Dealmakers, the brainchild of fellow HomeVestors agents Jim Williams and Rob Caldwell, affords a platform for any wholesaler in the area to present non-MLS-listed deals to an interested audience.
“It has turned out to be a really good venue for everybody—for investors, for rehabbers, for flippers, to people who loan money, to people who want money, to contractors—it’s turned into something pretty big here in Greensboro,” Corinne said.
John and Corinne bought a property that night and were introduced to the HomeVestors concept by the seller. HomeVestors gave the couple and their business the marketing know-how and brand consistency and reach that they needed. What sealed the deal was the franchisor’s face-to-face, local, individual coaching program.
Like HomeVestors, like the Dealmakers sessions, like Triad REIA—John and Corinne believe in “abundance over scarcity,” the idea that there’s enough business for everyone and that sharing knowledge and lessons will benefit everyone, and the industry as a whole.
“Let me tell you,” John said, “for these new investors, a lesson that we learned, and this is an expensive one.
“We remodeled this one house, and it came out fantastic. It was just a one-level, vinyl-sided ranch that had been owned by the same people since 1948 and still had mostly original cabinets and fixtures. It had been well loved. We rehabbed it, it goes on the market, and it sells in three days.”
End of happy story? Unfortunately not. The buyer’s inspection revealed a buried oil tank that had at one time been used for heating fuel and that had leached into the surrounding soil.
A Costly Oversight
“It cost us $20,000 to dig up and remediate the soil,” John said. Fortunately for the couple, they eventually recouped $15,000 of that from the state’s super fund. But the point was made.
“We didn’t do our due diligence,” John said.
Ever since, they look for telltale signs like sealed pipes or partially hidden vents and fill tubes, and they invest in their own inspectors who use metal detectors and then hand-auger past the bottom of the tank. If the soil meets acceptable readings, the companies provide written certification. “And that service is about $200 or $250—that’s the best money you can spend, I’m telling you,” said John.
They caution that the same attention should be paid to determine the presence of asbestos, which is common in popcorn or tile ceilings installed before about 1978. Testing is usually under $50 to determine whether mitigation will be needed.
The couple is well prepared now, with a laser focus on due diligence, strict procedures, adherence to schedule and insistence on excellence.
John’s main focus in the business is on buying the properties, while Corinne oversees operations—keeping the office going and the funding coming, coordinating subcontractors for the rehabs and staging the open houses.
Corinne prepares a multipage (sometimes as many as 15) scope of work for all aspects of the project—electrical, plumbing, painting, windows, roof, etc.—as well as contract and payment schedule, “so everybody is on the same page. We don’t really have any problems because it’s all clearly defined.”
The planning is intense, she said, but worth it: Once the project gets rolling, it’s nonstop activity. “We are basically a six-week kind of company.”
Once Corinne closes on a property, the cleanup crew goes to work—sometimes even before the transaction has been recorded, John said. “Time is money.”
Engage with the Neighbors
Another key tip from John is to quickly introduce yourself to the neighbors, to let them know what activity to expect and to engage their interest in keeping the site safe.
“I talk to all the neighbors around that house, within two or three houses deep, “ John said, “and hand out our business card and let them know there will be a lot of noise and construction and truck traffic. But I also tell them, ‘At the end of the day, you’re going to love this house, and when it’s done, your property value will definitely increase.’” He also assures them that work will be limited to daytime hours, with no work on Sundays. “I tell them, ‘If you see anybody over there at night, you call me.’ So we’ve got some 10 sets of eyes watching the property. They’re our security system.”
It’s also a chance for the couple to get the word out about Citygate to other prospective sellers. “We usually get a house or two (in referral) out of the house we’re doing because somebody knows somebody,” John said.
Citygate also has a following on social media that seems to grow with each project. It started with a house John called “perfect!”—complete with dead trees, a frog-filled pool, things falling apart all over the place.
“It just needed ‘Citygate love,’” Corinne said.
John documented their progress on Citygate’s Facebook page, with “before, during and after” photos. “And we’ve done that on every project since, and by the time we have an open house, we have about a hundred people there,” John said. “It’s crazy!”
The Power of Social Media
The trend of crowded open houses followed by multiple offers and quick sales is definitely attributable to the social media buzz, Corinne said, along with their excellent work, high-quality subcontractors and John’s photography.
“People like to see good pictures,” she said. But John is quick to add that people also like to see the real thing and to be able to envision themselves in the home. That is where Corinne’s design expertise comes into play, as they stage several key areas of the home before each open house.
“We put bathrobes on robe hooks and slippers by the bed… we put things out, like little soaps in the bathroom,” she said. “People like to see how rooms are going to be used. When you fill the rooms, people can visualize themselves in there.”
Inside, they decorate with furniture and amenities in the living room, master bedroom, bathrooms and kitchen. Outside, on a deck or patio, they’ll put a gas grill and patio furniture.
“And it really works great,” John said, “because you can see after a showing, the chairs are all disheveled. They’ve sat out there for 30 minutes and talked about their plans, I’m sure, and what they’re going to do to the house.”
No doubt, the potential buyers also have been admiring and envisioning themselves in the well-coiffed yard that John works on from day one.
It Starts with Curb Appeal
“The yard is one of the first things we do,” he said, “where most other people make it one of their last tasks.” The benefit of the Teshes’ landscaping timetable is that over the six weeks or so that a property is undergoing rehab, a reseeded lawn can grow, trimmed shrubbery and trees have time to come back and newly planted flowers can bloom.
Plus, Corinne said, “the neighbors are psyched because somebody came in and started fixing the place up,” eliminating what may have been a lingering eyesore and also brightening up the entire neighborhood.
John and Corinne stress that it’s important to look beyond a property’s current sad state of disrepair and instead envision what it can become.
As an example, John told of a hoarder house from which his crews removed 12 dump-truck-loads of trash. “We actually found a second bathroom upstairs that we didn’t know existed, so that was a nice treat. It wasn’t even on the books, the tax record, and it was a full, second bath,” John said.
“A normal, average homeowner could never have taken this on. The banks won’t loan them the money on it, for one thing, and that one house totally transformed that neighborhood after we were done with it,” he said.
He and Corinne like to call themselves “residential redevelopers.”
“We feel good about being able to help provide a solution for people who have a need, who may feel trapped in their situation and embarrassed about the state of their house,” Corinne said. “We try to put the homeowners at ease and help them see a way out. And it feels good for us to be able to do that, and they feel good about their situation, too.”
About John and Corinne Tesh
Company: Citygate Homes, LLC
Location: Greensboro, N.C.
Website: www.citygatehomes.com
Office Phone: 336-854-8000
Guiding principles: It’s as simple as the Golden Rule! Do unto others as you would have them do unto you.
What makes you get up every morning: Getting out of the house and going to our office. We love the fast pace and high energy required to be in real estate.
Most memorable deal: The Northwood “hoarder house” property that we bought in September 2014. It changed our course and got us started on the journey we are on today.
Biggest influences: “The E-Myth” by Michael Gerber, “Mindset” by Carol Dweck, motivational speakers Jim Rohn and Tony Robbins.
Technology you can’t live without: iPhone/iPad
When you’re not working: Meditation, travel, yoga and hiking for Corinne. John likes restoring and showing his classic cars, travel, boating and photography.
If you weren’t in real estate: This was a tough one. We can’t picture ourselves doing anything but what we’re doing now.
What most people don’t know about you: Corinne wants to get her pilot’s license. John gets ready and out the door in under 10 minutes.
If you had it to do all over again: We would have gotten involved in real estate earlier in life.
Favorite quote: “There are two types of pain you will go through in life: the pain of discipline and the pain of regret.” — Jim Rohn
Linda Wienandt is Editor-in-Chief of Personal Real Estate Investor Magazine. Contact her at lwienandt@affinitymediaservices.com.
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