Given enough time and staying power, poor investments can turn around

2 Replies

This is a follow up post to a post I made almost 5 years ago about my first two investment properties, you can read that thread here:

I still have both those properties.

One my daughter and a friend are in right now.  She's in college and the house is close to where she goes to school, so it works well for her.   It's currently a loser rent wise, my choice though.  Market rent on that house is now in the $1700 range.  

The other house has had an excellent tenant in it that is in their 4th year.  She's currently paying $1455, and her rent goes to $1495 in July.   She's under market and I'm OK with it since she has been an absolute model tenant.

Both homes are now worth in the $200K range and both have market rents in the $1700+ range.   I wouldn't buy them today, way too much for the rent they bring in, but I'm in one @ $168K, the other @ $155K, so I'm OK with them both.  Payments on each of these houses are right at $470 a month.

I self manage, so no PM expenses.

Just thought I'd share to show that absolutely horrible investment choices (before I knew about BP) can work out in the end providing you have the stomach and funds to weather the storms.   Both of those houses have been trashed at least once by family and/or by regular tenants.   I've leaned a lot, I've dealt with a lot, but never gave up.  Both properties, while not ideal investments by any stretch, are now in position to cash flow quite nicely.

The hardest thing was getting off the fence.  I got off the fence, took my lumps - paid my dues I guess you could say.   

These properties were just awful investments, but they got me in the game and that's what really counts.   With what I've learned in the process, and all the wealth of knowledge available here on BP, I'm in a great position going forward.

I appreciate your recap, Kevin.  Makes me reflect on my earlier years in this business.  Back then I just wanted something to happen and would try to buy anything I could.  I used ridiculous logic so I could justify to myself why I should buy it.  I got burned, took my lumps (as you said) and have learned to treat this business like any other business.  Houses are widgets and I have remove the emotional aspect to buying them and act accordingly.  If I am $1,000 apart from the seller, it's time to walk.  We get better with this business over time and when we are not trying to "force" deals to happen.  Sitting on the fence is the other side of the business.  Find a model that works best for you and that is between forcing and sitting.

Kevin, thanks for the post and I feel your pain.  I still own three houses I bought back in 2004 and 2005 at near the highs of the bubble here in Phoenix.

One is worth 35k less than I paid, one 45k less and one 55k less!

Only one really cash flows because I was able to lease it as an assisted living facility.  The other two only break even (at best) because I was able to use HARP and refinance them in the 3.5% range 30 yr fixed.  

But as you said, I am wiser for it and just closed on my 29th and 30th property here in Phoenix a few months ago.  

Thanks for the update and continued success.

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