The First Step Toward Wealth Creation: Unexpected and Scary but Done

Hi,

Thank you for stopping by.

In 2005, my wife and I were enjoying life as new parents.

We were living in Hoboken, New Jersey and working in New York City.

Our lives had once been focused on us but now revolved almost exclusively around our young daughter.

Together the three of us shared 964 square feet in the form of a 2 bed 2 bath third floor walk-up condominium.

Our home was our second in Hoboken. It was new and terrific.

There was nothing to fix and, as compared to the studio we had enjoyed in New York or the 1 bedroom condo we had bought and sold as our first place in Hoboken, the apartment felt spacious.

The layout was efficient. The ceilings were high. The floors were hardwood. The micro outdoor terrace made us feel fancy. 

What else could one want?

Hmm, well, there was always the battle for on-street parking to solve.

And outdoor space for the kiddo would be nice.

Yeah, a place for guests to stay would be convenient.

Uh oh, now we had convinced ourselves that we needed something new, bigger, fancier.

Such is life at times. A first world problem for certain.

As if summoned by our new need, we came upon just the thing on a summer afternoon following a lunch for which wine had mostly been the meal.

It was a 3 bedroom 2 bath duplex with parking and outdoor space.

It was a unicorn. 

Hoboken did not have such places, we thought.

So with little real thought we offered to buy it; we had been the first couple through on its first afternoon of open house.

We used equity from our 2 bedroom as the down payment for the new 3 bedroom.

Specifically, a pair of home equity loans - one a fixed line of credit and the other a revolving variable line of credit.

Appreciation had been robust since 2003, when we had purchased the 2 bedroom.

Our bank welcomed our application and inquired as to whether we'd be keeping our current place as well.

'Yes,' my wife said. 

For seven years she had been listening to me talk about owning rental property. 

In her view, it was now or never.

I was terrified. 

Here in front of me was my dream. 

The beginning of wealth creation through rental property.

I came up with many good reasons that this was not the right first rental.

Many of them really were good reasons. But most of them were fear personified.

The math wasn't really right.

There likely wasn't a lot of appreciation left.

What if my wife wanted to stay at home in the future and we had less income in an emergency?

What if.....?

But, in the end, even though it wasn't really the right time or the right approach, we did it.

We became landlords.

A lovely expatriate family from Europe became our tenants first and then our life long friends over the course of their four year tenancy.

We've had terrific tenants since.

Never a missed payment and not a single month of vacancy.

The math wasn't really right but it has been fine.

The appreciation had mostly run its course but it has nudged up year by year.

And now it has been ten years since our start.

An odd start, but ours.

I wish you luck with yours.

Have you started already?

Please share your story below in the comments.

Thank you.

Speak to you soon,

Jonathan