My $11.00 Education

I came of age during the Global Financial Crisis in 2008 in South Florida. I watched neighbors lose their homes; beach front condos go into foreclosure; and friends get laid off from even entry level jobs. This made me very hesitant to invest any money into any asset, including real estate. My parents never invested for retirement and watching the stock market crash made investing seem like a gamble. Apparently you could lose almost everything you had invested overnight. I remember waking up on October 17th 2008 and seeing the small amount I had in my Roth IRA had dropped over 50%. I was new to the military and wasn’t making much…a little over $38,000 a year at 22 years old, but I knew that I didn’t want to work forever and needed to figure out what to do with my excess income. After 2008, my 15% interest savings account at Countrywide dropped down below 1%, and I sure wasn’t going to save myself into retirement making $38,000 a year.

Without any financial knowledge, education, or family background in real estate investing, I started my financial independence journey with a single book in 2009: “Be a Real Estate Millionaire” by Dean Graziosi. To be honest, I think it was the first book I ever read cover-to-cover. I was amazed at the many nuances to real estate, especially the amount of public knowledge you could find at the local county court house. Property taxes, loan amounts, deeds…all the information was there with a little bit of work. I was especially interested in learning about which areas to invest in, how to ask for seller’s concessions, and opportunities for 100% financing. I always imagined real estate was like buying bread at a grocery store: you pick what you want and you pay for it. I never imagined you could use the bank’s money to buy an asset and have sellers pay your closing costs. After living in the seller’s market in the past half decade, it’s hard to imagine what the buyer’s market was like in 2009…times have definitely changed! A couple of the most meaningful things I took away from his book were to look for a house on the edge of a great neighborhood, the worst house on the best street, and to look for homes from builders in early phases prior to prices increasing. These are maximums that I still use to this day!

Reading his book gave me the knowledge to go into my first deal at 24 years old. Most of my friends were partying and buying cars – I was researching real estate at my first duty station in Louisiana. I found a newer home that was at a 25% discount from what the seller’s paid in 2006, in a good neighborhood, and that had fallen out of contract; the home was for sale by owner, and I contacted them the first day I saw it. We agreed to a sales price, and I contacted a lawyer at a title company to help me draw up a contract. I still remember my lender chuckling when I told them I was 24 years old, had never bought a home, and was doing a transaction without a real estate agent on either the buyer’s or seller’s side.

This was the cheapest home in one of the nicest neighborhoods in Alexandria, LA. We ultimately settled on a sales price of $205,000 with the seller’s contributing $5,000 towards closing costs. I was nervous and sweating bullets about putting 10% down, and had never spent that much money in my life (Private Mortgage Insurance for $70 bucks a month was well worth putting 10% down in lieu of 20%!). We closed in about 30 days, and I lived in that home for two years while I was stationed in Louisiana. Looking back, it must have been funny for my neighbors at the time (mid 30s and 40s) to have a kid barely out of school as their neighbor. Oh well, it was nicer than the barracks! I sold that house in 2012 for $224,000, and was excited that I actually made money in real estate and didn’t lose my shirt. I took the gain from that house and used it as a down payment for a condo in Austin, TX, which I immediately turned into an investment property when I found out I was deploying to Afghanistan shortly after closing. Even back then, rent was almost $2,000 in Austin, which allowed me to cash flow about $300 a month. So in my early 20s, these were my first two adventures in real estate. I found out that if I could find the right property, I could use that asset to realize a capital gain and/or cash flow as an investment property. I held onto that condo in Austin until recently, when I sold it in 2018. With these two deals under my belt, I began my real estate investing career in earnest in my mid-twenties.

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