Posted about 1 month ago

The accidental real estate investor

It was by accident that I came to buy my first investment property in 2017, even prior to buying my primary residence post-divorce.

I found myself looking for a single family home under $150,000, with no rehab work, close to downtown Annapolis so I could manage the property more easily, since that's where I live.

And if it hadn't been for the Bigger Pockets forums and podcasts, I would have probably never done this... 

But there was one serious motivator to my goal:

At the end of 2016, I met a family from Mexico, refugees and the victims of forced labor, in desperate need of better housing. I first got to know the two young daughters through the local charity I was volunteering with on Saturdays. Then met the parents, and soon witnessed the abject conditions in which they were living. All 4 of them sharing a single room in the basement of a crummy home, where 11 other people shared the same kitchen, the same bathroom. For $600!! The landlord had clearly no regard for written leases, rental licenses, or plain & simple decent living conditions. I knew their "lease" would be up in May 2017. I had just a few months to make this happen. 

And that is also when I learned that they were expecting their third child... and there was NO way they'd have this baby in that house!

I set out to find a home I'd buy and rent out to them just as long as they could afford to (more or less) cover the mortgage, taxes & insurance.

I researched and studied for months, and eventually bought a home that fit the bill. A 2-bedroom, 1-bath duplex offered at $135,000 that was pretty much ready to go! At that point, our community and their church really came together, donating all the furniture and decor for the home, while a few volunteers and I pooled the rest of the funds needed to stock the home in preparation for the arrival of their new baby!

I drafted a two-year lease (in Spanish, mind you!) with gradual increase in rent so they could build a small security deposit (which they could not pay for at time of move in), and to give them time to get on their feet. In fact they're about to renew for another 2 years!

Sure, at the moment I barely break even, and take a loss on Schedule E. The property would otherwise easily cashflow $400-500 per month with market rent.

But what's more important than more change in my pocket is that 5 people have a safe place to live and are proud to call home. I had enough faith in their hard work and desire to dig themselves out, and gave them a chance to do just that.

And I am grateful for the opportunity to cut my teeth and learn so much. From negotiating a sales contract and financing on an investment property, to handling home inspections, rental licenses, lead inspections, "emergency sump pump assistance", water damage and insurance claims. And going to bat against the State of Maryland to fight the increase in my property taxes... there is so much to learn by DOING than sitting on a chair while browsing the internet can never accomplish.

In conclusion: "Helping one person might not change the whole world, but it could change the world for one person". Or five!

Thank you to all the BP staff & contributors who helped make this happen.

PS: I won my appeal, and my property taxes are actually going DOWN starting with 2018! I'll tell you later how this happened...