Buy, Hold, Passive Income and Patience

[Tracy Sharpe]

Our most successful real estate triumph has not completely manifested. We purchased 5 houses in Fort Worth, Texas (Sendera Ranch, Haslet, Texas) in 2005/2006. In each case, we used conventional financing, 20% down. After we purchased these homes, we rented them. The challenge was to be patient. Even though we put 20% down, we still had to make the monthly mortgage payments which also included paying the equity loan that we used to finance 5 rental properties located in a community that was new and had few or no amenities. In fact, there was no Walmart, McDonalds, Pizza Hut, Burger King, or any medical facilities close by. 

Before our purchase, the Realtor whom we were working with stated that the Alliance Corridor will one day be a hot area and that many people would be moving into the area because of future developments. Unfortunately, several years after purchasing our rentals, the economy took a downturn and the equity in our rental homes was gone and there was still very little development in the area. The economic situation caused many people to lose their homes throughout the United States because they purchased them with little or nothing down using an interest only loan. 

Furthermore, because so many people lost their home to foreclosure, we were able to rent our homes through the economic downturn without a problem--even though the area was not fully developed. Moreover, despite the drop in value of our rentals, our renters were paying the mortgage so we held on. 

Because we took action to buy, hold during a downturn, use the passive income to make our mortgage payments and maintain patience during a chaotic time, now, in 2016, we have an Amazon Distribution Center, a Walmart, McDonalds, Pizza Hut, Burger King, dental offices and an emergency medical clinic within 3 miles of our rentals. Additionally, we gained all of our equity back and more. We also have increased the rents by over $200 in several of our homes, and if we sold today, we would sell at a profit. Although we continue to have challenges, our triumph has been a result of taking action in buying, holding, using passive income to pay our mortgages and being patience during an economic downturn.