Hello everyone!
I think it’s about time I introduce myself and share our story. I was born on August 8, 1982. Just kidding!I’ll fast forward.
I’ve been reading around on Bigger Pockets for a couple years now, and this first post is long overdue. I thought I would explain how we got started here. My wife and I enjoyed watching the renovation shows on TV (I’m sure you’ve never heard that one), and we thought maybe we would enjoy doing that for a living. Before long, my google searches led me to Bigger Pockets, and I fell in love with the idea of real estate.
Initially, we were going to focus on flipping houses since my wife was skilled with design choices and I’m a handyman with construction experience. After a few months of reading on Bigger Pockets, though, I really liked the benefits of buy and hold and passive income.
We were living in an apartment in West End, Nashville, and we decided to buy a house. We bought a HUD foreclosure in Goodlettsville, TN (just north of Nashville) in October/2013. It had been on the HUD website for at least 4 months, and they had dropped the price from $148,000 to $130,000 or so. I'm not sure why no investors bought it, but we decided to offer $111,000.01 (we thought we'd beat out someone who offered $111,000, LOL). We got it! We got an FHA 203b loan (financed a new HVAC unit) for about $119,000. We put $100 down, and had HUD pay our closing costs.
We moved in November 3, 2013 or so. On November 17, an electrical attic fire forced us out of our new home! We were upset at the time, but that was actually a huge blessing. It was only a small attic fire, but with water damage from the fire dept and smoke damage, we wound up with a total budget of $80,000 from Liberty Mutual to renovate our new house (which we could NOT afford at that time, we were poor, stupid idiots who thought we could renovate a house). We learned a ton from this renovation, and this made us want to flip houses or use the BRRRR method even more.
Skip ahead to September/2015, and it was time for us to move to Florence, AL (or Muscle Shoals, AL) for my job (project manager/engineer). We decided to become landlords and rent this home out even though we would be living 3 hours away. Before we did this, however, we did a cash-out refinance to pull out some money for real estate investment. We owed approx. $117,000 and we knew the value of the house had gone up since Liberty Mutual renovated it for us (thank you!). The appraisal came back at $212,000, so we were able to pull approx. $50,000 of cash out of the house. I wish I had gotten a HELOC also while we were still owner occupants, but oh well.
We hired a property manager (Renters Warehouse) and they have done a great job so far (I did have to manage the manager a little in the beginning). They took professional photos and listed our property for rent. We were in no hurry to move, so we decided to try and get as much rent as possible out of the house.It took a couple months, but we finally got a signed lease for $2,000/month. It's cash flowing now at about $250 per month after all expenses (PITI, property mgmt, vacancy, CapEx, maint.), so not too bad. I should mention that due to the previous fire insurance claim, landlord insurance cost us $3,000 initially! Ouch! We plan to sell at the top of the market before Nashville stops being so hot.
Oh wow we really thought we were so official now. We’re actual real estate investors! We have over $50k in the bank (money that we borrowed, haha)! Anyway, we moved to Florence, AL and rented a townhouse while we searched for a new home to buy. We have since bought a few properties, and I will post about those ASAP. Hopefully I did not bore you to tears, I did not expect this to be so long. I would love to hear any questions, comments, or advice! And if you are in Huntsville, Florence, Muscle Shoals, Sheffield, Tuscumbia, Athens or any area close to me, please contact me!
Thanks for reading,
- Michael
