The Border Inn Short Stories
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M.M. Casanova Jr.
M.M. Casanova, Jr. is a native of San Antonio, Texas. He was educated in San Antonio private schools and graduated from the University of Texas at San Antonio. He has a Masters of Business Administration from the University of Texas – Rio Grande , and is a Certified Public Accountant. He currently lives in the Rio Grande Valley with his wife Carmen and they have four children, Manuel III, Andrea, Veronica, and Anissa.
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The Border Inn Short Stories - M.M. Casanova Jr.
Copyright © 2020 by M.M. Casanova, Jr.
All rights reserved. No part of this book may be reproduced or transmitted
in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system,
without permission in writing from the copyright owner.
This is a work of fiction. All of the characters, names, incidents, organizations, and dialogue in this novel are either the products of the author’s imagination or are used fictitiously.
Any people depicted in stock imagery provided by Getty Images are models,
and such images are being used for illustrative purposes only.
Certain stock imagery © Getty Images.
Rev. date: 12/03/2019
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CONTENTS
Introduction
Chapter 1 Beautiful El Paso
Chapter 2 Let’s Buy a Motel
Chapter 3 The Owner’s Son
Chapter 4 Our Motel Staff and Others
Chapter 5 Taxing Situation
Chapter 6 Shameful Clients
Chapter 7 Inspections, More Taxes, and Lawyers
Chapter 8 Other Worries
Chapter 9 Life Near the Border
Chapter 10 Extended-Stay Clients
Chapter 11 Maquinitas
Chapter 12 Conclusion
Glossary
This book is dedicated to my parents, Manuel and Gloria; my wife, Carmen; our children, Manuel, Andrea, Veronica, and Anissa; and our loving families.
INTRODUCTION
From the beginning, there is a dream to own your own business and make a lot of money so you and your family can enjoy the finer things in life. It has not worked out that way, yet. My son and I are still waiting for our ship to come in. We maybe see a slight glimmer of the mast. This book is a collection of stories that are part fiction and part nonfiction. The names and places are fictional. It is also a collection of observations and of the potential trials and tribulations of owning your own small business.
There are so many headwinds going into business for the first time that is not for the weak of mind and weak bank accounts. All the planning that one does can be shattered by one event, such as a hurricane, rising gas prices or interest rates, a significant water or roof leak, monetary devaluation, disgruntled employees, lawsuits, etc. Or the headwinds can involve a combination of things that can hurt or ruin your business in a short time or a slow kill. What do you do?
The more money you can make, the better you’ll be able to drive off these headwinds and also cover a lot of mistakes that you will make. Guaranteed. With additional capital you can rebound to set the ship straight in a hurry. The trick is how do you make more money? If it doesn’t work out, do you abandon the business, sell the business, or find the grit to fight until the end?
The Small Business Administration (SBA) estimates that the risk of any new business surviving in the first five years is 10 percent! There are so many legal and financial risks that pop up from everywhere. You need to have enough money and enough grit to weather the storms. Even though you are in the mouth of the lion, there is, believe it or not, hope. The financing to purchase our motel was arranged with a bank out of Louisiana that specializes in SBA lending. With the SBA 504 program, a borrower basically puts down 10 percent of the cost (equity), and the bank finances 50 percent of the cost, usually with a floating interest rate and a twenty-five-year amortization. The SBA finances 40 percent of the cost through a long-term, fixed-rate loan, also with a twenty-five-year amortization. This is a very attractive program for small business owners like me.
Many financially successful people that I know went through hell and back. Now they are wealthy because they survived the pain. One important lesson is that you make your money on the buy.
That’s comparable to saying, Buy low and sell high.
I thought I was buying at a good price and realized I overpaid for the motel. My business negotiating skills were nonexistent.
In hindsight, I should have negotiated a much lower price, which would have helped me during all the financial storms I experienced. I would have been paying less in mortgage payments, and that extra cash would have helped me with the other payments I had to make. I would have lowered my risk.
I put a lot of financial stress on my family and me. The question is whether all of this grief and money was worth it. It has been more than ten years since I purchased the motel, and I have not received a profit yet. I use a lot of the salary I make as an accountant to cover any shortfalls for the motel business. Obviously, this is a big risk. I am essentially using short-term gains (my salary) for a possible long-term gain (selling the motel). Basically, it turns out to be an investment with a long-term hold. Fortunately, what has happened is that the loan debt has been cut in half, so I guess that is a return on my investment. The losses I have incurred every year reduce my taxes as well.
The real return is supposed to happen when I sell the motel or refinance the loan and cash out a significant amount of money. Then I can say it was worth it. It is hard to be positive after ten years of cash shortfalls. I could look at alternative investments like stocks or certificate of deposit accounts. Buying stocks can give you decent returns, but it comes with high risk. The stock market is so volatile that you need some luck and a lot of patience to get good returns. Certificates of deposit are basically no risk, but the yields are very low. So if my plan works, I expect to achieve a return of 50 percent every year for ten years, plus if I refinance and cash out a good amount of money, it will be an excellent strategy, and I will still own the property.
This book describes the day-to-day micro problems, issues, and wins that I have faced as an owner. Hopefully, the reader can avoid or minimize some of the mistakes I have made. On the other hand, hopefully the reader will appreciate that with no risks there is no reward. The financial opportunity can be significant if certain events fall into place.
I majored in accounting in college and became a certified public accountant shortly thereafter. I really liked the business world because of the opportunities to hit it big. I was good in math and wanted to push my skills in the business world for my own benefit. So I wanted to be conservative in looking at job opportunities and decided to become a CPA with a small firm and see what areas I wanted to specialize in.
During college I found many articles that said the service industry was going to increase in demand, particularly in the accounting area. Population growth patterns indicated more businesses would open up, meaning more accountants would be needed. So being an accountant seemed safe for job prospects, and also I am kind of on my own. It’s all about your production and how many new clients you can bring in and keep.
Obviously, being an accountant doesn’t necessarily lend itself to being outgoing like a vacuum cleaner salesman. Accountants are seen in the business world as conservative and quiet, working in the back room away from all the activity in the front. I figured an accounting degree could help me in business if I ever wanted to buy or invest in a business.
I ended up specializing in estate, retirement, and tax planning because I saw what happened to my boss who worked his tail off for thirty-plus years, established a successful business, and decided to retire early only to lose most or all of it because he had no will and had not done any tax planning. I’m sure he was going to get around to it, but he was gone so quickly.
I had a couple of good financial years from my CPA practice. The twenty years I spent at a big CPA firm were invaluable. Learning from an established firm with seasoned accountants was a good move on my part. The best thing about working there was that the firm had unlimited resources, With ten other accountants and a dozen bookkeepers, the firm was so much more efficient in getting work done versus being a solo practitioner.
Because I had about two hundred fifty thousand dollars in accumulated cash that I saved over the years, I talked to my bankers about how to invest the money. I wanted to make more than what I was earning at the banks. All of them gave conservative recommendations that basically involved bank products or their proprietary investment houses. I was not going to put it in a low-yielding savings account or even a money market earning about 1 percent. The stock market was too finicky, and I did not want to pay excessive broker fees.
I wanted to be more aggressive and take a shot at real estate investments. Based on my calculations, as well as familiarity with many of my clients who were in the real estate investment game, I figured that I could easily
get a return between 10 percent and 17 percent and have the business pay down the debt from operations. I knew it would not be a get-rich-quick scheme, but I wanted to earn a return much higher than the traditional investment vehicles. I knew that I had to have patience because it was going to take several years to turn a profit.
The tax season was a bear. From January to April, I worked almost seventeen hours a day, including Saturdays and sometimes Sundays. Then we did it again from August through October for the clients who filed extensions. After five years of being in fourth gear, it was time to move on to something else. If I were to stay another two years or so, I might have made partner. But I just did not like the aggressive culture of pushing hard to increase the number of clients.
Now I have to worry about payroll, scheduling, making appointments, etc.—the business side of an accounting practice. Although I make less money, I don’t work the seventy-hour workweeks anymore. I control my own schedule. It is priceless but not easy. My time is now split between two CPA firms and the motel. It is like juggling three balls in the air while standing on a trampoline.
I tried to decide where a forty-five-year-old man invests his money with a good, safe return. I have been intrigued with real estate since I was a teenager. I worked for a well-known restaurant owner on the San Antonio Riverwalk. He was a serious real estate investor, as he owned several restaurant properties, apartments, and condominiums in the downtown San Antonio area. I worked in the corporate offices for several years and was impressed with his knowledge, his passion for real estate investments, and what appeared to me to be an industry with great financial opportunities.
So my desire was to invest in some sort of income-producing asset like apartments, retail strip centers, small offices, and so on.
CHAPTER 1
Beautiful El Paso
The City of El Paso
I was happy that my wife and I decided to move to El Paso, Texas, in 2004. I had saved enough money from my CPA practice that I wanted to invest so I could slow down and smell the roses. My wife, Carmen, grew up in El Paso, so we would be returning to her hometown.
With a population of about one million, the city is not too big and not too small. It has pretty much everything you need. It is a very different city from San Antonio, my beloved but humid hometown. El Paso has a desert climate. The sun shines about 302 days a year—which is great for my terrible golf game—but El Paso and the surrounding mountains get snow.
The city is situated on the US-Mexico border, across from Ciudad Juarez, Mexico, and is the largest border city in Texas. The other neighboring city is Las Cruces, New Mexico. For several years, El Paso was ranked the safest large city in the United States. Unemployment is under 5 percent, and in 2012 the city passed the $400 million Quality of Life bond. El Paso has several Fortune 500 companies and a very strong federal and military presence. Fort Bliss is the second-largest US Army base, with about ten thousand personnel and an area of 1.7 million square miles—one of the largest military installations in the world. In addition to military and government, the economy is diversified with international trade, oil and gas, health care, tourism, and service industries. The University of Texas (UT) has a presence here as well, with more than twenty thousand students.
El Paso has several events during the year, including a rodeo sponsored by the Professional Rodeo Cowboys Association, the Balloon Festival, and several music