I just wanted to share my small success and lessons learned in our REI adventures thus far. My husband and I are in our mid 30's and had never purchased a house until last year (both active duty military so renting was the way to go for the longest time). I have a long family background in real estate investing so we both knew that eventually we would love to start investing in rental units.
In March 2015 we moved to Sparta, Wisconsin. The first thing we realized was that there were hardly any options for renters. For that reason, we purchased our first house. Within a week of moving in we were walking down the road and noticed a FSBO sign in a nearby yard. Fast forward a month and we had purchased our first rental. Now, Sparta is a very small town so people talk. We actually had people contact us before we could even advertise it for rent. It was vacant for one week after purchase. Better yet, we had inadvertently began networking and making contacts that would lead to each purchase afterwards.
A month later one of the contacts we had made (a local contractor and real estate investor) got us in touch with another FSBO deal. We inherited the current tenants which we would have normally been hesitant of but they were military as well and turned out to be great tenants.
Our next two purchases happened within the next six months. Both were bought from the same seller and were already rented. All of our purchases happened within a year. We started out with very low expectations just purchasing one house each year...yet here we are.
We have a really good relationship with our lender as well. As a matter of fact, today a man contacted me wanting to sell a duplex and said that my lender had given him my name and number. I get to see the property this weekend. We are pretty stoked as this could be our first multiunit.
We utilized our VA loan for our primary house and used our savings and other creative methods for down payments on the rentals. We use a lender at a smaller bank and have been able to secure conventional 30 year mortgages to finance each house (with 20% down).
In May of this year I separated from the Army (husband is still in) and plan on going back to college while also pursuing more deals to add to our small portfolio. With our salary cut in half the cash flow from each property is an added bonus.
Things we learned:
1) In hindsight we should have used our VA loan for a duplex and owner occupied.
2) Looking back on our very first purchase we clearly didn't know how to negotiate. We've become better educated and more aggressive with each purchase after that though.
3) Sometimes you have to do without in order to afford a down payment. We sold our camper and one of our motorcycles so that we could purchase one of the houses. We haven't regretted that decision yet!
4) We are learning to be able to fix small issues. Our first tenant called us with a plumbing issue one day. Neither of us knew anything about plumbing so we sent a plumber out to the house. $280 for 10 min of work...we became YouTube experts after that!
Anyways, long story short, we are so happy that we've finally made the plunge into REI. We aren't looking to own hundreds of properties but instead just enough to live comfortably without having to sacrifice time with our family to work long hours. We are on our way....!
Congratulations on your successes. We were mili to mil, as well. I got out first to raise kiddos. Did 6 active and 4 reserve, before buying rental houses, as you have done.
Just a note on the VA: both of you can use your eligibility. You may have some eligibility left over from your first deal and can use it again on a second owner occupied, provided you have lived in the first for 12 months and will move into the second for at least a year. Many people think you can only have one at a time but we were recently qualified for a second.
And then there is the other party who can also use their VA. And possibly twice depending on how much eligibility used.
Thank you for the info, Kerry. We knew we both had VA loans to use. It weren't sure how to go about it and still be "legal."
I served nine years on active Army and now get a chance to. E with our daughters. It's a wonderful thing. I was wanting to work from home....looks like I found what I was looking for lol.
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