My REI Journey--It All Started With A "Cha-Ching".

Sure, there was definitely the resounding "cha-ching" of a cash transaction that started my real estate journey. However, it wasn't money being deposited into my account, it was my money being handed over to my landlord. To me, my residence with them was half a paycheck, but for them, it was money to their ears.

Exactly two years ago, I moved into my first apartment in Bellevue, Nebraska after joining the United States Air Force. I was 22 years old and ecstatic to finally be living on my own. 

Fast-forward 4 months to me calling the cops on a neighbor for getting a little rough with his girlfriend. After which, he proceeded to come downstairs and attempt forced entry into my apartment. Even long after the cops hauled him away I hadn't regained my sense of security in my own residence. I had to move. I knew my apartment charged less for rent than my friends' apartments. I was dissatisfied at the thought of having to spend more money on something that wasn't bringing a return (I have been investing in the stock market since age 14). After a short amount of contemplation, the light bulb lit up in my head.

I knew that, if done right, buying a house can be an excellent investment. So I decided to purchase a home. But I was still going to be spending a significant amount of money on a mortgage. Sure, in theory, I may be getting a lot of it back when I sell the house in the future, but it was still a lot of money in the mean time! Many of my friends told me that they cut down on their apartment expenses by splitting rent with a roommate. Aha! Another light bulb! 

Before buying the house, I invited an Air Force friend to come rent a room in my home shortly after I closed on it. Because he was military, I knew that I needed to buy a house that I could afford on my own in case he got orders to move. I'm glad I thought that far ahead because sure enough, he will be PCSing later this month. I've also opened up a second bedroom to be rented out and in the last 1.5 years I've owned the house, I've had 3 roommates cycle through my house.

Little did I know that this is a method that the Biggerpockets community likes to refer to as "house-hacking". I discovered Biggerpockets weeks after I bought my house when I realized that I wanted to purchase rental properties as a means of steady income. My version of house hacking has a little twist, though. Typically, a house hacker uses the tenant's money to pay down the mortgage while investing their own money in future endeavors. I've reversed this technique. 

Remember when I said it was important to be able to afford the home on my own? Because of this, I've had all expenses (to include the entirety of the mortgage and three people's use of utilities) come out of my checking account. On the surface, my checking account reflects that I am the only one living in the home. I've put these expenses into my personal budget to demonstrate that I am not losing money each month by doing this. All expenses in this house are treated as through I am incurring them alone. Additionally, I am still able to save 30% of my paycheck toward stock investments and retirement. Bonus, I even pay myself to be able to travel and still have spending money while doing so. So what do I do with all the rent money?

I save it! I profit 100% from the rent that I'm given. From time to time I do take from that pool in order to pay for some repairs or property tax. Like with a normal rental property, I have kept meticulous records of tenant leases, check deposits and utilities for tax and documentation purposes. However, I have not ran this home as I would a rental property because it was not initially designed to be one. It's been my primary residence that I've shared with good friends of mine. My next step is to use their rent money as a down payment for my next rental property. Eventually, I plan to put this house up for rent as I do a live-in "BRRRR" (while simultaneously house hacking)on a new property.

In later blog posts I'll describe what kinds of investments I'm interested in and how I intend to find/fund them. For the time being, I just wanted to share another story of a humble beginning in real estate. It's my hope to inspire other 20-somethings who are still waiting on the sidelines to finally get in the game. In the last 1.5 years I've lived with close friends of mine and passively made over $18,000 in rent and utilities during that time. Hands down, easiest money I've ever made.

Since a young age it was always a goal of mine to retire early and to be in control of my own time and experiences. Real estate has greatly sharpened my vision to achieve this. With consistent, dependable passive income, financial freedom is certainly attainable. I'm convinced that our youth should be spent learning, growing, and--most importantly--taking chances that our older years won't afford us. The only thing hindering our success is an absence of belief, lack of knowledge, inability to be creative, and unwillingness to execute. I, for one, refuse to be limited by any of these things. What about you?

Please feel free to give any of your thoughts, concerns, or questions. Especially if you're still waiting for that "magic moment" to start your investing pathway.