Six real estate properties. It’s a lot. And considering I’m 29, you’re probably wondering how the hell I did this. How I’ve managed to rally the funds, navigated the financing, and then end up with a house (or six). For most people, one house is a long-term savings goal. How do I have six, and how did I afford them?
So, I’ve time-lined how I bought my real estate properties from day one. I started at my college graduation and ended at my most recent rental purchase.
How I Became a Real Estate Investor
In December of 2011, I graduated from the University of Texas and happily continued living with four roommates in my dirty college party house. I started teaching 3rd grade the following June, feeling very comfortable at my $43,000 salary. It was the first time I had earned real money, and I felt that freedom, especially with my $600 rent.
In March of 2013, our landlord informed our raucous group that he would not be renewing our lease, and we realized our college glory days were over. We were forced to find new living situations. Craigslist quickly made it apparent that rents in our neighborhood has skyrocketed. My “comfy” salary was dwindling and I knew it would only get worse. My budget was feeling a little stretched!
I had the crazy idea to buy a house (with no savings), and my mom was unsurprisingly on board. The unrealistic search began!
I wanted to buy in downtown Austin, which had appreciated 12% in 2012. My focus was on location, and I had the blind confidence to take on any scary house project. Luckily, I was outbid by cash offers over and over on shanty houses in prime locations.
I moved my search slightly East, and asked my grandma to help me with a bigger down payment. I finally found a “flipped” 2 bedroom, 1 bathroom, in a less than prime location.
An Exact Breakdown of My Real Estate Purchases
Note: this is what I’ve personally been able to do with real estate. Take what advice applies to you to get your first home!
PURCHASE #1 July 2013: I bought my first house for $180,000 and lived in it for 2 years, feeling very accomplished and never imagining that I would ever do it again
In July of 2015, my then partner and I wanted to live together (my first cohabitation!). We decided that moving into a house closer to downtown would be a good compromise, rather than moving into either of our current residences. I posted a test craigslist ad listing my house for rent and I was inundated with interest. People wanted to live in my house, pay my mortgage PLUS $500! I could not believe it.
We started renting a supremely overpriced craftsman style cottage an easy bike ride from downtown. This lasted 8 months. It was a happy, fun 8 months, but we parted ways as I restlessly tried to find my path. Sure that he wasn’t part of my path, but not sure about anything else, I searched Craigslist for 1 bedrooms rentals on the east side. (This is an expensive part of Austin.) I had a few months to figure it out, but things were feeling bleak.
In May of 2016, my good friend, Liz, found an amazing house for sale across from our college house and right next to her beloved community garden. She desperately wanted to buy it and I was all in to partner (on a whim of course). She ended up buying it with her family, but I was bit by the real estate bug again. It was an exciting alternative to renting a depressing apartment or sharing a house with roommates.
My mom had a small chunk of cash from the sale of her house, so we went on the hunt for a house to buy and fix up.
PURCHASE #2 July 2016:
We found our sweet Gonzales House with a big lot and an extra unit in the back with existing electrical and plumbing. This was-and still is- a major score. We decided that the bones were solid enough for us to work with. We bought it for $302,000.
To have cash to renovate, we put as little down as we could. We worked tirelessly throughout our summer. We loved it and realized how much we could do to add value. In total, we spent about 6 weeks and $35,000 working day in and day out.
Turning the home purchase into a financial investment was my top priority. There are lots of ways you can increase both the value and the cash flow of your properties- learn more right here!
In November of 2016, I was confident that my home value had risen enough to get that $250 extra mortgage insurance off my monthly payment. I got the house reappraised in hopes of lowering the payment by removing mortgage insurance. The house appraised for $408,000, which got rid of my mortgage insurance and gave me the confidence to pursue real estate.
In December of 2016, I was restless in my job and knew I needed to make a change. That same year, I decided to get my real estate license. I wanted to move toward schedule freedom. I also started listening to podcasts and reading books about real estate investing.
In February 2017, I was officially licensed and I couldn’t stop combing the MLS for deals. I rallied my mom and my uncle and the search was on!
PURCHASE #3 December 2017:
My mom, my uncle and I bought our first investment property in Round Rock, TX as a trio. We split all the upfront costs, and my realtor commission counted toward my portion.
This really helped me, as I didn’t have much liquid cash and I had my student loans. We officially formed RE Mau LLC (in memory of my grandpa, Ronald Ernest Mau).
PURCHASE #4 February 2018:
RE Mau LLC bought our second investment property, a duplex in San Antonio. We funded it with private money (a high interest loan). We financed 100% of the purchase price, but split the renovation between the three of us (~$20,000).
Once again, we wanted to make this property a cash flowing investment for us all. We will refinance this property to get rid of the high interest loan and finance it with a cheaper loan.
PURCHASE #5 March 2018:
My little sister, my good friend, Eleanore, and I bought a house in the Holly neighborhood of Austin (my very favorite neighborhood in Austin).
We bought this property with 5% down payment as a primary mortgage (cheap money!). I am currently rebuilding this house, basically from the ground up.
I’m pouring a lot more capital into this one. I’m also living there, and I’m obsessed with the location. Additionally, it will be worth a pretty penny when it’s done. There is a separate exterior entrance to one wing of the house, which will function as a primely located Airbnb while we fix up the rest of the house.
PURCHASE # 6 April 2018:
RE Mau LLC bought our third investment property in San Antonio, a little single family with a back house and a lot next door. Just like the first San Antonio duplex, this was funded by a private money loan – we are BRRR-ing this property as well (buy, renovate, rent, refinance). Since this property was in such good condition, we were able to only put around $3,000 into it to get it rental ready. The back house needs a little more work, but we’re able to put that on hold while we save up some more capital.
An (Almost) Full Time Real Estate Investor
Not everyone wants to do exactly what I’m doing, but if you want to go down a similar path or do what I’m doing to a lesser degree, my biggest piece of advice is to RESEARCH. Listen to podcasts, read books, follow blogs, ask questions! Even if you’d like to learn more passively, start by listening to one podcast a week. In my experience, it’s pretty addicting once you start learning.
I have a very distinct learn-by-doing style. I don’t learn well in a classroom (ha! says the teacher) and I don’t learn well by JUST reading or listening. I need to combine my learning with action. I need to fail and I need to learn the hard way sometimes. You know yourself and your learning style. Adapt your goals and figure out what works for you!
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This post by Steph Douglass of Open House Austin