Starting now, I’m going to be posting a report of my real estate investing at the end of every month. These reports will just cover the basics of what I have going on with my properties.
I currently own three properties. Two of them are true rentals and the third I live in, but I house hack, meaning I rent out my spare bedrooms and pretty much live for free.
I manage my own properties also, but have plans this year to start transitioning towards using a property manager.
Let’s dive in!
Keep in mind, this is a very simple way of showing income and expenses regarding my properties. There’s a lot more that you should account for and I can’t stress enough that if you’re thinking about getting into real estate investing, you need to educate yourself! There’s a lot more to pay for besides the mortgage after you get that rent payment. That’s a topic for another time.
Honestly, I’m not making much money on a month to month basis, but I’m in the game for the long haul and I watch my wealth increase every single month.
Property #1
I bought my first property when I was 21 years old. At the time, I knew nothing at all about owning a property, let alone investing in real estate. I just knew that I didn’t want to throw my money at paying rent and never see it again.
At just over 1400 sqft, my first purchase is a one story, single family home with three bedrooms, two bathrooms, and an attached two car garage. There’s a small fenced in backyard and a patio as well.
The property was a foreclosure and originally listed at $139,900. By the time I saw it, around 60 days after being listed, they had brought the price down to $119,000. In the end, I got it under contract at $117,000.
Using a VA loan I was able to get 100% financing and the closing costs were covered. All I ended up paying were inspection fees and lawyer fees. My total monthly costs totaled under $700 and that’s including Principal, Interest, Taxes, and Insurance or PITI.
When the bank owned it, they put new flooring in and painted as well so there really wasn’t much I needed to do. The one thing I did need to replace was the water heater a couple months into living there. Other than that it’s been pretty smooth sailing.
Over the last three years of owning it there’s been minor things that have come up. The biggest of which was just replacing the motor for the garage door.
While I was living in the house I ended up reading Total Money Makeover by Dave Ramsey. From that, I decided I wanted a way to save more money, so I got a roommate. It was a friend of mine and things worked out well. He had a nice place to stay and I was getting $500 extra a month. I was only paying ~$200ish every month at of pocket for my living expenses. Not too shabby for a 21 year old I’d say.
After being there for a while, I ended up reading Rich Dad, Poor Dad. It totally changed my perspective on how to build wealth through real estate. As soon as I read the book, I said to myself, “I can do that!” and from there I decided to purchase my second house and being building my small empire.
Property #2
I’ll admit I was definitely naïve moving onto my next purchase. With 2019 here, I’m going into my fourth year of owning property and investing. In the last four years, I’ve spent hours upon hours reading about real estate, listening to podcasts about real estate, and talking to people about real estate. Even with all the effort I’ve put into educating myself there’s still a ton I don’t know. At the same time though, you have to just go for it at some point and that’s definitely what I did.
At the time of purchasing my second house, I was 22. My car was paid off and I finally had no personal debt besides my first mortgage. I still had some of my VA entitlement left to use too!
What a lot of people don’t realize is that while there is a “loan limit” for your VA entitlement (it’s $484,300 in 2019) there really isn’t a limit at all. You can use your VA loan as many times as you’d like and you can have multiple VA loans at the same time. You can also use the VA loan to purchase a single-family home all the way up to a quad-plex (property with four units in it).
While I don’t regret my purchase, if I knew what I know now I would’ve done things differently, but of course hindsight is 20/20. Maybe I’ll share my thought about that in another post sometime.
One more thing I should mention regarding the VA loan. If and when you go to use a second VA loan at the same time of already having one, there’s a stipulation that you must purchase a property at a minimum of $144,000. It’s really weird and kinda screws you over because as an investment property you want to have a low mortgage payment in order to maximize your cash flow. Well, when you’re putting nothing down and have to spend the minimum $144,000, your monthly cash flow isn’t going to be looking too hefty. The one good thing is the low interest rate that’s locked in for 30 years. This property has a rate of 3.4%.
My purchase price was $154,950.
It’s pretty much the same story as my first one. It’s roughly 1500 sqft, one floor single family home with 3 bedrooms, two bathrooms, a back porch, fenced in back yard and an attached two car garage.
This property was also a foreclosure and once again the bank had put in new flooring and paint. Also once again, I had to repair the hot water heater ($$$).
This property has also been pretty easy to maintain with no major issues going on. There have been a few issues with the HVAC system, but nothing substantial yet.
I continued having a roommate to help with expenses. While I lived there the mortgage (PITI) was under $900. I was paying roughly $400 out of pocket, a little more than the first property, but hey I’ll take it! Better than paying for all of it.
Over the last couple of years, the real estate market has picked up in my area which has helped with the appreciation of my properties. I don’t pay too much attention to appreciation because you can never really count on it, but when it does happen it’s nice. In 2018, the value of this property increased by $10,000. $10,000 more added to my net worth! Woohoo!!!
At this point I was on a real estate high and wanted to keep going, so after living there for a year I was on the look for my third property!
Property #3
If you’ve been tracking up to this point then I’m sure you guessed that I was 23 when I purchased my third house.
The story starts to change a little bit now. My third property wasn’t a foreclosure. It wasn’t even on the market! It was actually owned by family members of my real estate agent who had been planning on moving, but hadn’t started the process of listing it yet.
The property is a tri-level single family home, roughly 2400 sqft with 4 bedrooms, 3 bathrooms, and a fenced in back yard. No garage this time which was a little disappointing, but I do have plans to build a car port.
I used a VA loan again, so now I have three of them at the same time. However, on this purchase I ended up going over the “limit” so I had to put some money down. I paid roughly $7,000 in the end and the purchase price was $146,350.
There was also some work done before I moved in. I had new counter tops put in, new flooring and a few small things. I also had some trees removed from the front yard.
I’ve lived in this property over a year now and have continued house-hacking. I’ve had four different roommates and everything has gone well. Two of them decided it was time to move, so no problems there and I currently have two roommates. My monthly payment is just under $950 and I get $1000 total from the roomies so I’m living for “free”!
This property has also been fairly easy to maintain and I finally didn’t have to replace a water heater after moving in. Hallelujah!.
Since I’ve been living here, I’ve been learning more and more about real estate investing. I’m always looking at properties and analyzing deals. I’m currently in search for property #4 and hope to close on one within the first 90 days of 2019.
Property #4
In the works!
The next property will get me out of the single-family investing strategy and take me to the next level as I’m in the process of purchasing a small apartment building.
Not only am I looking to expand the number of rental units I have, but I’m taking my investing back to my hometown in Pennsylvania!
I’ll also be using partners to help me expand my small empire which is totally new and something I’m figuring out as I go.
I don’t have much to share at the moment, but as I get further along I’ll be sure to post about it!
Overall, the last three years have been an adventure with some big learning curves and great experiences. I don’t really make much money off of the properties in terms of cash flow at the moment, but the properties are self-sufficient, financially speaking, and I haven’t lost any money. Each month the tenants pay my bills, bringing down my total mortgage debt and increasing my net worth. I’ve also saved up six months’ worth of emergency funds that cover principal, interest, taxes and insurance should anything go wrong.
I love talking about real estate investing so if you have any questions or comments feel free to reach out to me!