Getting started and Introduction

[Mike Cavaggioni]

Let me introduce myself first. My name is Mike and I am active duty Navy going on 18 years. I am currently stationed in Hawaii and love it here. I am looking to possibly retire from the Navy soon and have had an interest in real estate investing for a long time.

I have been a part of a few different groups and have tried many different methods to generate passive income. I have owned different websites, I have also done the drop shipping thing (with some actual success, but couldn’t keep up with it). I was always interested in real estate (and I will probably get back into blogging once this takes off to talk about my real estate adventures). My only other experience with renting property was when I rented my first house before I sold it in 2012.

My uncle has multiple rental properties in upstate NY and he planted the seed in my brain about 10 years ago. The big sticking point was convincing my wife that this is indeed the right move to make. Before doing that, I had to change my mentality first. Wanting to invest in real estate is one thing, but if I am not mentally ready to commit 100%, how can I convince her? So we linked up with some good friends who are also stationed out here in Hawaii to talk about their portfolio. They have been doing this the past 6 years and at the time where closing on their first commercial property. When they showed my wife the numbers, she looked at me and I knew she was ready to do this. As to changing my mentality, I have a list of books I need to read (starting with Rich Dad, Poor Dad). I plan to burn through a bunch of those books soon after I finish something else I am working on (will discuss later in this post).

I linked up with a good realtor, property manager, and general contractor back on the east coast because that is where I wanted to invest (thanks to my friend for linking me up with great contacts). I was stationed in the Norfolk/VA Beach area for 15 years, so I am very comfortable with the area and the market. Thanks to the Navy having the largest Naval Base there, it is an extremely good renters market. Now the hunt begins…

My real estate agent set me up with an MLS list and updates it daily. It has all the criteria I asked for and would only show me properties that met that criteria. So now we are searching for our first deal. So what would happen when we find this deal? How will we pay for it? I talked with my friend about this because I knew we could afford it, but wasn't smart on the requirements on buying investment properties. We didn't have a lot of liquid assets to use so we had to be creative. I took out a very large personal loan and let it settle for 2 months while looking for "the deal." The first 3 places we were really interested in where "no go's" for us after our contractor went and looked at them… Then BAM, we found it! A duplex in Chesapeake, VA listed for $160,000. It was on the market for 2 months and was getting no bites. I was able to immediately tell from the pictures it was due to the outside of the property. It looked a little dated and could really use a total paint job.

My contractor went and inspected the property and the current tenants where very happy and they wanted to stay. The hot water heaters for each unit where probably on their last leg and the roof needs to be replaced soon. Everything else looked pretty good. So I put in an offer.

There is some back and forth discussion and I submit the offer for $149,000 and they pay closing costs. Deal is accepted and we start moving forward. While all of this is going on, I link up with other real estate investors in Hawaii. There where two different meetups that I went to and met some great people (this is also when someone showed me bigger pockets). Can you say mind blown? Wow, so I start listening to podcasts, reading the forums and seeing what everyone else is doing. I am so pumped at this point. I get my wife to start watching some of the bigger pockets YouTube videos and she is getting pumped. She’s not quite as gung-ho as me, but I blame my military mindset for that.

Ok, the blood is flowing, I am hungry and I am wanting so much more. I linked up with a good real estate mentor out here from one of the meetups and I am currently working on getting my real estate license (which is why I am not reading any other books until I finish this). I am learning so much from the course I am in and I am super excited to keep pushing forward on this journey

Now, let's move past all the fun motivating stuff and get down to the nitty gritty. While all of this is going on and I am so excited, motivated, and hungry… I hit some major roadblocks with the property I have an offer on. I push through many of the minor obstacles, no problem… Well, the day before I am supposed to close, my loan officer hits me up and says, Hey Mike, your loan is cleared and you are gtg… but there is a problem… Problem? I said What is it? Well, we submitted your loan request with you putting 15% down and you were going to have a slight PMI, but we messed that up… since this is a multi-unit property, you need to put 25% down. That's not a problem is it? Well, yes… yes it is… because I was already tapping myself out to get the 15%.

Now I want this to happen and I want this property… I talked with my wife and she had a minor freak out but I brought her back in and went over the numbers and how we needed to look at the bigger picture. Not I need to come up with another $18,000. So I am scrambling. I was able to take out an $11,000 loan on my Thrift Savings Plan (it’s a military 401k). As I pay it back, the interest I pay is also going back to me, so this was not a bad route to go. Ok, still $7,000 short, I put a $7,000 cash advance on one of my credit cards to make it happen. While this purchase was a lengthy and somewhat painful process, it was also a great learning experience. I know I said lengthy, but things are moving very fast since I got serious about this venture in life.

Now here we are… I closed on the property yesterday and super excited for the future. I am most likely going to do a VA cash out IRRRL on my current home in Hawaii to pay off the other loan in conjunction with lowering my mortgage payment almost $200 a month. That's the next step, so we'll see. I may wait a little bit to see if rates will drop again.

So hello! Here is my first post (of hopefully many) and first rental property (of hopefully many). I am really enjoying what I am seeing/hearing (thank you awesome podcast) here so far and look forward to networking and learning opportunities.