Lessons Learned (SF Buy & Hold)

[Mario Arellano]

Just wanted to share some lessons learned to the New Investor community.  

My wife and I were fortunate to close on a SF home in North Carolina in Jan of this year (2021).  We decided to purchase the home b/c the existing tenant rent payment was under market and we had cash that we wanted to invest in real estate.  The tenant's lease ended in Feb 2021 but chose not to leave because she didn't want to.  Eventually, she decided to leave in March and we started the minor cosmetic work to have it rent ready.  What I didn't plan was the timing of our other rental property in California, where the tenant left in the same month (March).  We decided to make improvements in that rental and we had to carry the mortgage and pay for improvements at the same time.  

The lessons I learned from this experience were the following:

1.  Separate your savings with the money that is used for your investment property.  We didn't have this set up and as we continued our spending, my wife noticed how quickly our savings were depleted.  We knew this was going to occur, but it had a pyschological impact on us both, especially b/c we were spending on (2) rental properties.

2.  Make sure understand the risk in terms of having an existing tenant in place.  I believe Brandon T. and/or David G. on the podcast recommends to never have an existing tenant when you purchase an investment property.  I have also heard opposite advice from guest on the podcast.  I would recommend to asses the risk, run 'what if' scenarios and see what you're willing to accept.  I don't regret this deal in North Carolina because fortunately, we could afford the risk for our long term goal (buy and hold, long term).  

I hope this helps new investors and keep reading the information that is presented in this forum.

Mario