First, thanks to BP community and the amazing people here. I have made contact with folks from CA all the way to NY and down to AZ. Thanks to all the BP Podcast hosts and all who have been interviewed, thanks for taking the time to share your knowledge, it’s so valuable to newbies like me!
MY RE STORY
My RE story begins with immigrant parents who invested in rental property in their early 20's here in the states. Rentals are very attractive to immigrants as compared to the stock market because property is easy to understand, you can touch it, you buy it and someone rents it. That being said I grew up working in my parents rental properties, they owned 4. My father has always been a staunch believer in real estate and his saying is "God only made dirt once".
Growing up he instilled in me that paying rent is a waste of money and you should own a home as soon as possible. So, at age 20 I cut the largest check of my life for 20K (from saving and working since I was a kid) and we purchased a home together when I went away to school as an investment and a place to live. Idea was that upon finishing school we would sell it and I would get my money back plus some, home was purchased summer of 2006 and planned to sell in 2009. I had no RE experience, didn't know anything about cash flow and my father was betting on appreciation. Well 09 came and we could not sell the place and could not drop price fast enough to chase the market. Long story short we had to do a short sale on it, and it was hell for my folks. My father felt bad and did not want me to lose my money so he gave back what I put in and not a penny more.
Got a real job in 2012 after grad school and after doing mission work traveling the midwest and east coast spending about 2 months in OH. I bought my primary residence in 2013 but REI still attracted me.
In 2015 I got married which really put a damper on my REI ideas since my wife wanted nothing to do with real estate and saw it as a very large risk compared to traditional retirement accounts. Her folks never messed with it so it was foreign, yet for me my folks never touched retirement accounts so that was foreign to me. And so goes the meshing of married life and spouse backgrounds.
EDUCATION IS KEY!!
My thought was, how am I ever going to get my wife on board with this? RE is so powerful and amazing. I spent all of 2017 reading and listening to podcasts about traditional retirement accounts. We were putting money in a ROTH IRA and my 401K but I did not actually understand how it worked and where my money was going. I did not like that, so I set out to learn as much about retirement accounts as possible. Ended up learning our investment person had us in front loaded funds with the ROTHs, which ticked me off. So ended that very fast and took my money to Vanguard and I manage it myself now.
2018 came along, I found and joined BP in March and read Rich Dad Poor Dad. MY RE FIRE WAS RELIT!! This time around I started devouring BP articles, RE info, and listing to podcasts every single day traveling to work. I am only now at number 275 starting from 1. As I listened to the success stories I also started sharing what I was learning with my wife and when I found a podcast guest that was female or a couple I would listen to it with her. Over time she became more comfortable with the idea of buying a rental property. She saw that I was doing my home work and that I was not blindly leading us to utter destruction. SHE WAS ON BOARD!
THE SEARCH!
Oh where to look for property, well my own backyard of course!! So I began looking online and running numbers on an analysis spreadsheet I built. I connected with an agent and was being sent MLS listings. As time went on I began to realize that my county was not a candidate for cash flow even with 20% down. My own home has increased 70% in value since my purchase. Average home price is around 300K with a rent of 1200-1500. Great for bay area folks, bad for me! I took out a HELOC on my personal home just as a tool to have for cash offer if I came across it, NOTHING! The idea of self managing a property and seeing it every day was losing its battle in my mind.
I kept thinking where else can I invest with cheap homes and cash flow? I know, let me look in OH since I spent 2 months there. What I found online was blowing me away. Homes for 50-100k that I could buy outright and cash flow from day one. I reached out to several people in the area and even posted a thread and got a lot of great input. Spoke with Michael Swanny who was a podcast guest to get his input as well. Was planning a trip and kept talking about it with my wife. The more we spoke the more I realized I was not ready to buy my very first RE property out of state. It took a long time to get my wife warmed up to the idea and I did not want to blow it on something so far away we could not see. If I was single I probably would have pulled the trigger.
So where to next, well after listing to 100 podcasts I kept hearing over and over that if your marked is too hot start looking further away. They kept saying there is usually something within a 2 hour drive from your location. So that’s what I did, I began looking north where my wife was originally from about 2 hrs away, same story as our town as far as rent/price ratio so that was out. Next I started to look in the southern central valley and lo and behold, there it was 1.5 hrs away, FRESNO!!
THE DEAL!
I decided to zero in on Fresno. I also wanted to jump into multifamily properties 2-4 units. The reasoning was to acquire more properties with fewer loans. I started connecting with folks here on BP in the Fresno area and continued to analyze deals there. I found an amazing realtor, give a shout out to @Jeff Zimmerman who works with investors and understood what they are looking for. He was awesome to work with.
In December of 2018 we closed on our first rental property! A 4 Plex in a C class neighborhood. They are all 1 bed 1 bath units which was not my preferred choice but will do. To make the down payment I used money from my handyman side business I started in 2016. This deal is not a home run by any means but it puts us on the playing field out to first base. I spent the week after closing on it making repairs found by the home inspector. Some of the rents have not been touched for 8-10 years so I plan on raising those this year as well to help increase my cash flow.
I still have ideas of investing out of state but plan on learning the the ropes locally first.
FINAL WORDS
YOU CAN DO THIS!! If you can buy a personal house you can buy a rental property. If I were to do it over I would have truly looked for an opportunity to house hack my primary residence and purchased a multifamily instead. As it is though, the HELOC will be paying for the rehab on our first flip properly currently in process. I'll save that project for another thread!
THANK YOU FOR READING and if you have any questions please let me know. Sorry about the long story but what we have to share are our stories. This is how folks connect with each other. I hope this inspires 1 person to start looking somewhere other than their own backyard and start your journey to FI because that is why my wife and I are doing this.