From planting the REI seed to my first rental property!
Hello Everyone at BP and thanks for reading my post! I'm not even sure where to start, since I've had so much go on since I've started all of this, and its going to be a long one, so bear with me. This is my success story of my first buy and hold property. All of this started back in 2004-2005 timeframe. I was 20 or 21 years old, and I watched a late night infomercial involving a real estate investing program called Carlton Sheet's No Money Down. I'd ALWAYS see these commercials, with people telling the viewers their success stories and how easy it is to get involved with real estate and make thousands of dollars, etc etc. I was really interested in REI and earning passive income and I felt this was my calling. After spending multiple nights seeing this, while partying and drinking with friends, I ended up falling for the "try it out for 30 days risk free. If you don't like it, send it back!" BS line. I figure what the hell, why not! After receiving the package in the mail, I looked through the information, I ended up not sending it back and I paid for it. Not because I was going to follow this package to the T, become a millionaire overnight, but because I was too lazy to bring it to the Post Office. And I still have it to this day. I never actually used it or anything, and whether or not it's a gimmick; I didn't care because in my opinion, it planted the seed for the future.
So fast forward to late 2007. I find out that I'm getting deployed again to Iraq in Jan 2008. This time, I'm more wise about how I spend my money. My first deployment to Fallujiah in 2005, I was just 20 years old, I blew all of my money on stupid stuff that wasn't worth anything in the long run. I had nothing to show for it, but it's my own fault, and it's lessons learned. I'll tell ya though, I had a GREAT TIME doing it haha. Anyways, I was attached to 3/10 out of Camp Lejeune NC and before we deployed I stopped at the PX to look for some investment or personal finance books and I came across some book series called Rich Dad Poor Dad. I read the back of the book and I was hooked! I bought 3 books, which was going to be my reading material while on deployment. I called my Grandparents before I left to say my goodbyes and I told them about these books and I remember telling them, "Why work for your money, when I can make my money work for me?" They definitely agreed with that sentence. Again, I didn't do much with the knowledge and information in the books when I got back, but it helped feed the seed that was planted 3 years prior.
I bought my current residence in 2009. The house needed some work and updating, but it was a place to live and do some work when it needed it. Since I was restoring a car, I basically bought the house for the shed. This is also my first house hacking experience (although I didn't use it that way until later on), because I had a friend of mine live in the upstairs for about 3 years. I just basically blew that money off every month to restore this car. Again, let's fast forward to 2012. I decided that I was going to go back to school, finish up my Law Enforcement degree, become a police officer, make more money and pay off my debt. So between 2012 to 2014, I became a hermit and paid off about 26k in debts, while going to school fulltime, work fulltime, help plan our wedding and paid for that in cash as well. I felt pretty accomplished because the day we got married, my degree was completed, and I had everything paid off, except for our mortgage. I'm pretty sure I lost a few friends during that time, because I was so focused on my paying off my debts that every extra dollar that I made or had, went to debt pay down. After we got married, we decided to start to do the much needed work on the house. Although market conditions improved, I felt that we didn't have enough equity to pull out of the house and do the work, so I decided to take a 20k personal loan out. After completing a 3 year DIY whole home remodel, in 2017, I turned a 30k personal loan (initially a 20k, but we ran low and refinanced it to a 30) into 115k sweat equity. I then used that equity to pay off our personal loan, and then my wife's personal debts, which then left me some cash. After being approved for another mortgage loan, the search was on for our first investment property!
It seemed to take FOREVER to buy a property! Although we were looking at everything on the market, we were targeting foreclosures. Either we didn't get the bids in time, our offers were turned down, or we were outbid. We also felt that the realtor would roadblock us by not submitting offers that in their opinion was, "too low and the bank wouldn't take that" and was attempting to get us to pay for homes that we felt were too high, for their own personal gain on return. We ended up getting a new realtor. In the end, we found a 4+br, 1+ba SFR for 153k. When I looked at the property, it was vacant, but an active listing, so in my mind, the sellers NEEDED to sell and left the residence, or,they're snowbirds and left for the winter. It needed some work, but nothing that I couldn't handle myself. Mostly a good scrubbing. The house was built in 1938, it's a craftsman style home, original hardwood flooring in good shape, original windows but it very good shape, the walls and ceiling had been filled with blown insulation, had a new roof installed in 2017, and the sellers were willing to pay 5k to have the house painted to the color of your choice. I offered 125k, they countered at 140k and we took it. After closing, I had the painter start working on the exterior, while I cleaned up and was finishing the interior with the list that I had wanted done. I had the house within 6 weeks of closing, before I even made a mortgage payment! The tenants are on a 12 month lease, they pay all their own utilities, and they maintain the grass cutting and shoveling during the winter.
Here's the breakdown for those who are wondering;
House purchased at 140k with 20% down (28k)
Rehab/Repair costs: $3100 of my own cash, $2100 (paid to me at closing) to the painter from sellers for the remainder of the exterior paint job
PITI Payment: $861.00
Rent: $1570.00
What does everyone think for my first investment?
My goal is to buy property every other year, utilizing the profits that I'm getting from this investment, along with tax returns, to purchase another property. I cant just credit Rich Dad Poor Dad because at some point in 2015, I found BP online and it was HUGE push forward to help get my feet wet, by reading other people stories, following forums, and reading articles. Thanks for reading everyone!