Quote:
Originally Posted by MisterW
Awesome thread, thank you for starting it.
Could you talk about your first real estate investment? (What was your age? How much money did you have? What kind of experience or knowledge did you have at that point? Etc.)
Did you have a "regular" job before you started REI? If so, how long did you continue the job while doing REI? How did you manage your time between job and REI?
Any advice on finding a local real estate investing club to join? Google didn't seem too useful, but I haven't dug too deep yet.
Thank you!
My first property was a real old historic house in a college town. the house had been divided into a triplex and then later converted into a duplex. But there were still 3 elect and gas meters and 3 water mains. It had a nice three car garage with 220 electric service - so it was more like a shop.
My wife and I moved into one the downstairs unit and started renovating the upstairs. I figured that all renovations would take about 2 months. they ended up taking a year all told. oops.
Anyway, we renovated the upstairs and them moved up. then we renovated the downstairs. I can't remember the total cost of renovations, but they weren't too high because I didn't consider the value of my time - only materials. Part of the reason that it took so long is that I didn't really know what I was doing so I had to do just about everything twice - the wrong way then the right way. Luckily my neighbor was a carpenter and was sympathetic, so he helped me a lot. Great guy, and we're still friends today.
When I finally got all renovations done, I started advertising the bottom for rent. Nobody called for weeks. I looked in the paper and saw that there were about 20 similar units for rent, all for my same price range. However, we hadn't yet renovated the outside of the house, so it looked really rough from the outside and I'm sure that that killed me.
the problem was that I couldn't lower the rent because I didn't have any room cash flow wise. I didn't know what to do. I hadn't lived in town very long and we didn't really know anyone that I could talk to about my situation. Then my wife, who was a social worker at the time said, 'hey, my agency has a hard time finding rooms for lots of our clients and those guys have to live in hotels...maybe we could try to rent by the room'. Thats what we did.
At the time, I could rent the downstairs for about $550/month and the upstairs for $325/month and the shop for maybe $100/month. We were pretty much breaking even on the house or maybe making a small cash flow becausee we paid too much for it. But with some creative thinking we turned it into a rooming house for the mentally ill. We charged 6 tenants $250 each and utilities were included and rented the shop for $100. Everyone paid a $100 deposit and three bedrooms shared a kitchen and a bathroom. Everyone was on a month to month lease to give us maximum control. We still own that property today more out of nostalgia and as a reminder to me that with some creative thinking you can turn a mistake into an opportunity. it also has a $800 per month positive cash flow today, which is nice, and because of the neighborhood has appreciated about 7% per year on average.
We bought our first property with no money down on a 100% bank loan. We had good credit and a high income given that we didn't have kids. We found a special program for first time home buyers that allowed us to get in with no money down. I worked my full time job, then came home and renovated the house. On the weekends, I worked. I worked all the time. I sucked at the time, but now I'm glad I did it.