Starting to Build Wealth in Real Estate: The Surprise

Hi.

Thank you for stopping in.

My name is Jonathan Cope.

I am a husband, a father, a student, an athlete, a traveler, a trouble-maker and a landlord.

By day, I work in corporate real estate.

As a kid, I grew up in a hippy family whose dream it was to renovate a tremendous former polo stable in to a stately home situated on six acres, 15 minutes from downtown Boston.

We moved in to the home just after my birth.

It was falling down around us; exterior walls could be seen through in places and upper floors served as roof where the roof was gone.

It was the early 1970s. My folks had little but more than many.

The home they had bought from cousins of my grandmother.

To the cousins, the price was immaterial but the buyers' nature was important.

So, I learned from birth that good deals could be had in distressed property for all kinds of reasons.

Growing up, I also learned that renovating a home on sweat equity can spell frustration and disappointment along the path to opportunity and dreams.

For me the ramshackle place was magical. I ran around the fields playing and helped my folks as they called on commune help to re-roof and secure the house over years.

I thought it was magical. I could see how in its final state the place would be fantastic and offer huge value to my folks.

As Boston grew and the house improved, I learned from my folks about increased equity.

But, I also learned that some projects are too much and can take their toll.

We never finished the house but it provided tremendous upside on sale when the project ended my parents' marriage.

Along the way, I decided that property ownership would be my path to wealth.

I was always confident that I would become wealthy. And I always enjoyed the tangible nature of property. I got it, understood it, felt it was me.

In college, I began to scheme how I would own my first place.

Living off campus in a house hack was not an option as my university town was hilariously expensive.

But, nonetheless, I schemed as a form of day dreaming while saving what I could from summer and student jobs.

Two years after graduation, my wife and I bought the least nice apartment in a lovely converted townhome on the nicest block in Hoboken, NJ.

The NASDAQ was above 5,000.

The apartment needed work but was liveable and the house in which it was situated was a Grande Dame. 

Hoboken was still edgy, well before its backdrop for the Sopranos or Cake Boss.

But it was just across the Hudson River from New York City, accessible by ferry, bus and train, and we were certain that over time growth would benefit Hoboken and deliver equity. And it has.

Our plan was to fix the apartment while we lived in it, as my parents had done, and keep it as a rental as we moved on to finer digs in the future.

We would rinse and repeat using owner occupied financing along the way.

Well, the plan is nice to have had if not exactly what happened.

We did fix the apartment. Mostly DIY, with some support from vendors when we got in over our heads on select repairs. 'Hmm, how am going to put that plaster ceiling back up?'

A year after we bought, the world changed and so did our plans.

On the most beautiful day I can recall in New York City, the Twin Towers fell on 9/11.

Two hours earlier, I had passed through the towers on my way to the office that morning.

Three weeks later, my wife and I were married.

The week prior we attended funerals for classmates killed.

The economy tanked. 

The NASDAQ was below 2,500.

Interest rates fell from 8 percent to 5 percent on mortgages.

We refinanced.

The government gave everyone money to go out and spend.

Everyone wanted to buy the certainty of real estate.

Our apartment sky rocketed in value.

My wife lost her job and got accepted to law school in the same month.

We sold the apartment, paid for our wedding and bought another apartment, new, a few blocks away in an edgier direction for the same price but with twice the square feet.

Well, that was not the plan.

But the reality had netted us our first $125,000 in real estate wealth, and we still had our original plan to try again.

In three years, real estate had given us a base of wealth creation that saving and committed frugality could not match.

We had been frugal, always. And we still are.

But, nonetheless, we were surprised by the power of the real estate market and the way in which we were rewarded for our plan, even if it had little to do with the why of our first step toward wealth.

It was a nice surprise.

Has your journey surprised you yet?

Please share with me how in the comments section below.

Speak to you all soon.

Good luck,

Jonathan