We were in Arkansas and I was working as an intern at a big corporation–the kind you usually associate with job security, a good future, and a pension plan. My wife was working as a freelance designer from our 3rd floor apartment at a really nice apartment complex that was provided for us for the summer.
Everything was going so well on paper, but every day that I went to work I couldn’t help but think what things would be like if we didn’t have to work…at all.
A few months earlier some inklings of this wonder were creeping into my summer cubicle at my first call center job. They cheered me on as I packed “The 4-Hour Workweek” with my brown bag lunch every morning. Every now and then, I would find some downtime and start to think about how silly it seemed to be trading my time, which was my most precious resource, for money.
I started reading “The 4-Hour Workweek” during all of my 15-minute breaks and lunch breaks and my heart would literally pound faster as I imagined kicking my vocational concessions in the butt. I am so grateful for those lunch breaks.
Passive Income = Wealth
Back to Arkansas…
I started seriously considering what it would take to start working for myself, instead of working for other people who could control all of my time. I started reading some books and found out that working for yourself, or being a small business owner, is still tons of work.
I soon learned that multi-millionaires don’t work for themselves—they create a system for themselves—a system that creates passive income. They employ the magical wonder of compound interest to grow their wealth through many investments, whether it be real estate, the stock market, loans, inventions, or employees. I got so excited about this.
What About Real Estate?
I knew a little bit about the stock market, and I felt like the investments I had were set up pretty well—considering the small amount of money I had—so I searched for something bigger and better. My search eventually led me to real estate. In no other avenue of investing could I find a return on investment that was proportional to my diligence!
After some googling, I found BiggerPockets.com, a social network for real estate investors, which was a golden discovery. After introducing myself in the forums, I was introduced to several realtors, investors, and lenders who had high hopes for their future and an ambition I wanted to acquire.
So What Now?
Now I had the books, the curiosity, and the drive, but what was I to do next? Well, why not buy my first real estate investment and get started?
My wife and I started looking on Trulia and Zillow for possible rentals in Provo, Utah (we were moving back there after the summer).
We knew that we would need to get a duplex or a house with a basement so that we could afford the investment (the tenant would pay for the mortgage) in case anything went wrong. So we started looking for houses with “mother-in-law” basements to “house hack”.
After some diligent searching, my wife found a great property that had been posted online a few hours before we started looking. After checking the numbers to make sure it would cash flow, I called up a realtor from BiggerPockets and he did a video tour for us. It looked great! I excitedly signed the contract and got connected with a lender to set up the financing.
Closing the Deal
After a week, everything was set—we just needed to do our due diligence when we got to Provo and finalize everything. About the same week that we got back to Provo, we started to get an idea of what we were getting ourselves into. The realtor sent me a lengthy house inspection detailing, among other things, electrical problems on the upper floor that would cost around $15,000 to repair.
When we actually visited the house we found standing water in the basement and we were displeased with the unpleasant and awkward layout of the basement. Although I knew that good real estate deals weren’t usually attractive, we weren’t financially prepared to handle what was before us.
As we delved deeper into the costs of repair and the yearly expenses of living in my dream investment house, we realized that we were in over our heads; we simply needed more money and more time. As it turned out, the loan didn’t actually go through (getting a loan as a college student can be difficult), so our decision was made for us. And due to miscommunication, we were stuck with paying over $400 for the appraisal.
My First Real Estate Investment
Although it didn’t turn out how I wanted it to at all, I am very glad that I felt that moment of uncertainty–“Is this a good idea? Am I crazy?”—and said “Yes! You could be crazy, but this is a great idea and it will take you one step closer to becoming financially free.”
Now I am familiar with the process of buying a house and I am ready to jump at a deal when it comes. I’m not scared of putting an offer on a property anymore. I would never take back what happened; it was an excellent learning experience. My first real real estate investment will be even better because of it.
If you are just interested in real estate investing or you are struggling to get started, please let me know!
Shoot me an email at email@example.com or connect with me on BiggerPockets.