The Accidental Landlord

Our real estate journey started by accident. It was a result of cleaning up a financial mess, that grew into a successful business venture. Having just purchased our 3rd property and beginning to dip our toe into the renovating-to-rent world, I thought it would be fun to have a place to chronicle our journey. 

A bit of history first. 

In 2008, Mr. Small Print and I were expecting our first child while drowning in consumer debt. We had been married the year prior and purchased a house that was too big for our needs and our income. Only a few months out of college, my salary was a pittance and Mr. SP worked in retail sales resulting in highly inconsistent paychecks that often left us scrambling at the end of the month. With questions about how to get us out of this mess, I happened upon a financial planning blog with lots of practical ideas for getting on the path to financial freedom. I was hooked. It started with a budget (we had never had one!) and grew with finding every possible way to cut spending and pay down our debts. We made a dent but it was a S-llll-oooowwwww process. 

In summer 2009 we made the decision to sell our house and move closer to family. Only no one wanted to buy it. It was FSBO because we had no equity and couldn't afford a realtor. After months of trying to sell, we decided to try selling it on contract with a 3-year owner financing offer. It worked. They paid us a $5,000 deposit and reassured us they could get independent financing when the agreement was up. We had setup the arrangement so that their payment would cover PITI and a small amount of extra we were pocketing (about $100/mo) would pay down their principal when we went to finalize the sale. We hired a real estate attorney, drew up the paperwork and we were on our way. 

Back in our hometown we purchased a small 625 sq. ft. house for $68,000. The home was built in 1900 but had been stripped to the studs and rebuilt in 2007 so it was in great shape and needed no work, which was a nice change from our 1965 fixer upper we had left behind. Both of our jobs transferred so the transition was seamless. With our new $425 mortgage payment, we were going to be debt free in no time. 

During the course of 3 years, we paid off all of our consumer debt, high interest student loans, and both our cars. DH quit his job and went back to school and we were cash flowing the tuition. We started contributing 15%+ to retirement and for the first time in our adult lives we had actual savings in our savings account. All our hard work was paying off and we got to loosen the purse strings a bit - we even occasionally went out to dinner at a real restaurant from time to time. 

In October 2012 the time came to turn the house over to the buyers once and for all. Except they couldn't get financed. We offered to extend their contract but frustrated they declined. So now we had an extra house. After some number crunching we realized that the deal wasn't all bad - when you considered their deposit and the principal payments we actually did OK on the deal but we didn't want to do another contract sale and It wasn't really a good rental so we decided to move back in while we did some improvements to prepare to sell it. 

In the mean time, we realized our teeny 625 sq ft house WAS a good rental property and by that time we were ready to move on to something more comfortable so we decided we would rent it and when our first home sold, we'd find our forever home. Renting at $750/month the house brought in double the mortgage payment on our 15 year mortgage. 

A few months and home improvements later we realized we had really missed our original home and in our improved financial position it was more than affordable for us now. Still a bit big for us, started renting the 900 sq. ft finished basement first to my brother and then to strangers when he moved out. We later added a kitchen to make it a full apartment, and it now rents for the equivalent of our primary mortgage payment. 

It wasn't quick and it wasn't easy; lots of sacrifices were made to get to this point. As I wrote the timeline out I kept thinking "Wow! Has it really been THAT long?" but it was worth it to set the foundation for a successful future. And that is how our journey to real estate accidentally began.