Rental Success Story - My first property
Ok!!! So its been one year since I started with my first rental property. I want to share my story as I think it may help others who find themselves in a similar situation. I bought my first house at 25 for $179,000. I put down roughly $59,000 and financed $120,000. Two years ago I refinanced the property on a 15 year loan and 1 year ago my wife and I built a new home.
It took me almost the entire time our house was being built to decide if I was going to rent my first home or sell it. I was weighing the pros and cons, writing them out and doing more math, calculating and analyzing than a Nasa scientist. If I decided to sell the property, it would have sold for around $190,000 and I would have walked away with 84K. If I rented it, I would make around 10K a year (cash flow and equity). The big question and unknown variable was, could I find a great tenant???
After a considerable amount of research and talks with my wife, we decided to rent it. I rented the property for $1395.00 with a mortgage of around $950.00. I cover trash, lawn maintenance and leaf removal, which runs me about $500 a year. This was a must for me because it took care of one of my main fears, the tenant wouldn't take care of the yard. Peace of mind is worth $500 to me.
Here is how the last year has played out for me.
- I found a great tenant who pays on time. I researched (credit & background) everyone who applied. Spend time finding the right person, it PAYS off for sure.
- I have had 0 problems. Including 0 calls from the tenant and 0 maintenance issues.
- I will be hand delivering a thank you note with a $50 gift card to Bonefish to my tenant during my 1 year inspection of the property. I've never seen where people do this on here, but i think its a great idea to thank my customer for being a great customer.
In the end, I am extremely happy that we decided to rent the property. I am now looking at buying another rental with a long term goal of owning 10. If all rentals are purchased right, 10 would bring in roughly 40K to 50K of passive income. That wouldnt be enough for me to retire, but it sure would be nice to allow my wife and I to live the way we want!
My advice to anyone who finds themselves in my situation and dont know if you should rent it or sell it, here is what I have to say. Do your reseach and make sure it makes financial sense. If you cant afford it or need the money you would generate from selling it for another property, sell it!!! You have to put the work in and it has to feel right. That means you have logically believe it is a good decision and your senses have to say you will enjoy the responsibilities of being a landlord.
If anyone has questions about my first property or want to know more about my thinking when I decided to rent it, please let me know.
Robert