Newbie from Northern CA - 11 years in the making

[Jason K.]

Hello all, 

I found BP a few months ago and have been obsessed with the podcast, although not the biggest fan of the falsetto harmonies, jk. 

Technically, I started real estate investing about 11 years ago in my last year of college. I transferred to a school (Eastern Oregon University, in La Grande, OR - go mountaineers!!!), and didn't really want to rent and waste my limited money. My dad suggested buying a house with the eventual goal of renting it out and keeping when I finished school. The home prices were insanely cheap compared to CA (where I'm from and currently live), so it seemed like a great plan. We did pretty much zero research, and had no idea of the rental market, and the house was built in the 1920s. Great plan right? 

We got the house a little under the appraised value with an FHA loan (3.5 % down, thanks dad) I paid the mortgage while I lived there, and moved back to CA when I finished. Like I said, we did no research before hand. I had never heard of the 2% or 1% rule, or 50% rule at this point. We bought the house for 90k, and it initially rented for 600 if I remember right. What is that a .7% rule? - not great. After property management (10%) I was taking about a $100 a month loss before repairs that popped from time-to-time. Being single with no other liabilities I was okay with that. I always lived below my means and I saw the future benefits of having the principle bought down, and gradual appreciation as I moved forward. I knew I could handle the losses, and potential vacancies as they came up. I knew it would pay off in the long run.

I paid my dad back his initial down payment with interest a few years ago, and last year refinanced on a 20 year mortgage (also with 20k more towards the principle) to cash flow almost $200 after fees. I could have cash flowed a little more on another 30 year mortgage, but I figured the quicker I get to paying the property off the better. 

So, after 11 plus years if I were to add up all I have put into the property in terms of losses, money on principle, etc I'm sure it's around 35k. I have 45k left on the mortgage, and it was appraised last year for 115k (whatever that's worth...). it now rents for $700, and have had long term tenants with zero issues for a while (shout out to Century 21 Eagle Cap Realty in La Grande, OR). 

So, despite by bafoonary, and lack of forethought my first investment actually ended up okay. It certainly hasn't  made a ton of money, but it was a good long term learning experience. Obviously if I didn't have the means to handle losses and repairs along the way it could have been a much less rosey story. 

I kind of put REI on the back burner until last year. I'm looking to get into the buy and hold investing in Northern CA, and maybe back in La Grande. Our (now married to my lovely wife Andrea) plan is to purchase one to two more buy and holds in the next year or so. Obviously, this time I'll do a lot more due diligence, and research before investing. BP has provided such a great resource thus far, and I'm excited to move forward. My plan is to acquire a total of three buy and holds and then pay them off as quickly as possible before I aquire more. I know most people subscribe to leveraging as much to aquire as much as possible but my strategy is pretty conservative, and I don't need to cash flow right now.

Sorry, if this has been to long for a newbie intro, but I wanted to share. 

Jason K