Lots of pain, lots of knowledge gain - my first, inadvertent, REI

[Chip Brewster]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $102,000
Cash invested: $10,000
Sale price: $85,000

When I bought this home I had no idea I had become a real estate investor. I had an Army enlistment bonus in the bank and two college friends and I had all gotten jobs in the same city. I simply thought "hey, if I buy a house we can all live in it for way cheaper than an apartment, but with way more space!" Boom. I was house hacking. And this was 6 years before Brandon Turner coined the term!

Once my friends and I got other jobs I thought "let me try my hand at renting to someone I don't know." Boy was this a HARSH learning curve. My tenant screening process was non-existent and I rented to the first family with a good story. Two years later they were evicted leaving the house an absolute wreck and having not paid rent for at least three months. I got the *opportunity* to rehab the home, which was incredibly educational, and then gave it another go but with a much better screening process!

I got another family into the home and they were fantastic. Rent was always on time, they were communicative, the house was taken care of. They almost bought the home from me but then a job offer took them to a different part of the country. I was about to move across the country myself so I decided to sell the home. Unfortunately I had a TERRIBLE realtor (SHOP AROUND!! another lesson learned) and after several months of an empty property I finally sold it at a loss (which, as I learned, ended up being a tax write-off).

I would not call this a financial REI success story, but despite the many, many pains, I do reflect on this home with positivity. In the big picture, it was such a low-risk situation which made for the perfect "training grounds." The amount I learned out of this one property (all the REI stuff and all of the DIY stuff) definitely set me up for future success!