First Property and Scared as Hell

Updated: Jan 18

I look back at myself in December of 2012 and chuckle. I was a few days away from closing on my first investment property and I was experiencing classic “cold feet” symptoms. At that time I had very little knowledge about real estate investing and had received no formal coaching. The majority of what I had learned was on the Mr. Landlord online forum. I was working with a realtor and had put a 3/1 rancher under contract for a price I felt was slightly below market value, $140,000. My realtor had checked with the agent in his office that managed rentals and they said this home would probably rent for $1,250. I was going to get a conventional loan and put 20% down. My monthly payment would be $714 including insurance and taxes. The extent of my financial analysis was that $1,250 minus $714 equals $536 cash flow.

Somewhere along the way I had become convinced that rentals needed to have two bathrooms and so while I was in diligence I was consulting with a plumber to see if a second bath could be added to this home. We came down to a couple of days before the scheduled closing and my plumber let me know that it wasn’t feasible to add a second bathroom. This information along with the pending close sent me into “freak out” mode. Rapid heart rate, cold chills, the whole enchilada.

The day before closing I called the mortgage broker and told him I didn’t think I could go through with the deal. He was surprised to get my call and immediately tried to assure me that I would be okay. After a few minutes, he had successfully “talked me down” off the ledge and I went through with the closing.

For the next seven years I had two different tenants live in the property and gradually increased rent to $1,400. I have had positive cashflow every year. Property values in the area were increasing. I knew I was building some equity as the home price increased and I paid down the mortgage.

In January of 2021 I saw that home prices have rapidly increased and mortgage interest rates are at an all time low. I checked in with my mortgage broker and asked her to work up the numbers on a cash out refinance. The appraisal was done and came back at $204K so I’m able to take $49K of cash out at closing and will have a 3.1% fixed interest rate. When all is said and done my monthly payment only increased slightly and I’ve taken all of my original down payment back out of the deal.

So, what have I learned from this? I’ve learned that real estate is a great vehicle for building wealth over time. Even though my knowledge was limited when I started, I knew enough to be successful. Since then I’ve continued to learn by taking courses, reading and managing my own properties. The deals I’ve done since this first one have better returns and less chances of failure.

11 views0 comments

Recent Posts

See All