Since day one I always had a different way with money that seemed to be vacant in most of the people I knew. My folks weren't rich, but I had a great life growing up and owe that gift of money management and solid values to them. Baseball, soccer, camping. Not an A student my any means. I Saved up and bought my first truck for 1500 cash at 16. Joined the Marines for 4 years, came back a new man and rented in 3 different places for a few years while going to college to learn fire science and working part time. Man all I can remember thinking is "why would I pay 1000 bucks a month and get nothing back when I could buy a house and pay down some equity" Looking back 15 years ago its painful to realize how much I missed out on in the years since 2008. Im sitting here in my house hacked duplex and I got the idea to just put this out there and maybe generate some discussion and networking.
I thought my first house was a steal. I offered the full price without even thinking because I just liked it. 150k in 2010 was not a steal. A 1909 shadle rancher. 2 bed 1 bath on a double lot with some landscape potential. It was like my own park due to the way the home way set back. Roof was older 3 tab, old custom kitchen(oh that only be 10k yeah right) There was a large garage that was added on to the old garage which they had framed and drywalled about 600-700 sq ft. Sub panel but no water or sewer. I went several years of doing many overpriced repairs and upgrades to the main house before I started learning how to do it myself. I was very comfortable there. Slowly but surely I started to see what other investors were doing out there. I wanted in so I started looking into what it would take to finish the extra space off into a rentable unit. Several bids, no shows coupled with the need and worry about the sewer situation. I decided it wasn't worth the risk or cost.
By now a few people knew I was into investing and I was informed about a distressed property off market that might be available. Man, it sounded like the chance Ive been waiting for and and I began to feel the adrenaline rush off putting the little that I had learned thus far to use. Man this one was intense. I thought it was gonna fall through for about 10 months and most would have walked away. But this was a steal and I knew it. 5 bed 2 bath split level in a good area. Needed cosmetics only. Without getting too long winded I had to deal with challenges left and right personally and legal to finally get it transferred to my name. I had networked enough back then to get an bid for the renovation from another real estate professional. He only wanted 50k and I wouldn't have to touch a thing. Mistake or was it? I decided to take my intermediate at best knowledge of home improvement and tackle it my self. I spent a whole summer on my days off up there and I was lucky to have a little help from a skilled laborer for a reasonable rate and I hired out the big stuff. I rapidly increased my abilities and a part of me loved creating something with my hands like back in wood shop. I was beginning to see where this could go. I bought it for 125k after I was introduced to a great private money guy. 1 year balloon note at 10% and 2 points covering the entire purchase. I had to scrounge all the cash I had and even borrow some more to put a total of around 60k and 6-7 months into the rehab. Don't forget about the year it took me to get it. My mind spun with the possibilities. Sell it? Rent it? Move in and sell my other house? I ended up deciding to sell and 1031 exchange the profits into other properties. The only good thing about how long it took was it let the hosing market blow up into a strong sellers market. I sold it for 255k netting me around 60k.
Now I'm gonna say it right now I could've done this differently. My mind was not on cash flow for some reason. I worked on finding deals and future potential. I wasn't interested in paying full price on market. So through some magic from my realtor, I was able to transfer the profits tax free into 2 properties that were not yet on market. A 4 bed 2 bath home in a great area of town. 255k talked down from 260k, 30 year loan. Needed about 10k in work but the location and 1950's construction sold me on this one. Rent rates as I write this are cash flowing 400 not counting maintenance, vacancy or CAP ex. It started even less. But Ive got some ideal tenants in there and its easy to manage it myself. The other property was a great little lake cabin on 2 seculded secondary lots that was off market. 150k talked down from 155k. It an association so I have access to a nice beach, launch, and a prime boat slip. My mind went to how I could both use this for myself and as an income property by short term renting. Problem with this one is people only want it when its hot out in the summer. Exactly when I want it. Im comfortable now admitting that I have purchased a liability but it sure is nice to have. I recently refinanced(I know I know) to a 15 yr at an incredible rate because I thought Id have it long term. Both properties have appreciated like crazy since I bought them with minimal investment into them.
Ok this is getting too long... My last property was a sweet little duplex near downtown that my realtor found in a similar manner. Off market is key. Im super happy living in the bottom unit. I furnished the top unit and am renting it to travel nurses as its close to the hospitals. Covers the mortgage on the property and as also appreciated nicely.
I hate to admit it but I know I need to turn that cabin into an asset or 2 instead of a liability. I'm fortunate to call it a win due to market conditions but deals are gonna be even harder to find. Time to grind again. The equity is gonna propel me tax free again into something that cash flows.
Anyway, thanks for reading. I'd love to hear criticisms or otherwise. Lets chat!
Jeremy
