That's right, real estate. My wife and I are finally entering the real estate market and I am thrilled.
You may have heard that the fastest way to become a millionaire is through real estate. Oftentimes I believe it, yet obviously I have yet to experience it first hand. And I doubt I will at this point. However, it is great to begin my journey in this type of investing. In fact, I am very excited about this investment opportunity, because that ultimately is what I view it as, an investment opportunity. Consequently, I would like to share the details of it with you now.
It has been a bit of a fast paced last several days for my wife and I. A little background - we flew into St. Louis and drove to St. Robert, Missouri in order to research and check out the rental market right outside the army post known as Fort Leonard Wood. Our plan was to spend one day conducting our rental search and then the following day would be spent relaxing back in St. Louis. From the beginning, our plan was to simply rent an apartment or duplex in preparation for the possibility that I may be stationed there in the next few months.
Well, several hours into our trip, being very disappointed with the rental opportunities, and learning some new details about the VA Loan, my wife and I had done a complete180 degree switch in strategy. In fact, we spent the "vacation day" reserved for St. Louis looking at purchasing a home in St. Robert instead. To make a long story short, within 36 hours of landing in Missouri and beginning our rental search, we left with a written contract, with a realtor, to buy a brand new home. Quite a change from the original plan!
Needless to say, we really saw God's provision for us on this trip. We found a beautiful, brand new house, not even listed on the market yet, in a very quailty neigborhood, only minutes from post, at a very reasonable price. Exactly what we were looking for.
Now, on to the investment side of things...
One piece of information you'll be interested to know is that the longest amount of time we will be living in this house is no more than 9 months; a very short duration before we'll be required to move again. That said, many would think it is unwise to purchase a home when you only plan to live in it for about a year. I thought so as well at first.
I guess only time will tell, but right now my wife and I believe we will be able to hold on to the property when we leave, rent it with a net profit of about $50 a month, and have it completely paid off in a little more than 15 years. At that point, we'd be receiving close to an additional $1500 a month in passive income. What a cool bessing that would be.
Well, those are the "bigger picture" type details. As I mentioned earlier, I am very new to real estate and have been getting a whirlwind course the last few days as I try to navigate counter offers, closing costs, lenders, paperwork, etc.
In conclusion, I'd love to hear your thoughts on this idea. Or if you have any real estate advice in general, I'd greatly appreciate your comments.
Until next time,
DividendPartisan
Good luck with your new purchase! Its not for me, but it works for some. How do you plan on managing the property when you leave?
ReplyDeleteBig J,
ReplyDeleteThanks for the comment and good start on your blog..
I have a property manager set up that will charge a monthly fee to advertise the place, manage the tenet, etc. With their expenses, we'll be about $50 in the green as I mention above.
Keep in touch,
DP
Sounds like you have a good plan. With the base nearby, you should have a steady supply of potential tenants much like yourself.
ReplyDeleteGreat news, congrads!
ReplyDeleteHave you tried to calculated rentinvg vs. buying? We did many times and it was always cheaper to rent vs, own and this is without taking personal time into account,
I am very curious how could you buy and rent out - cover the mortgage and then get some income on top of it. Could you share the example, I am so excited about that.
Cashflowmantra,
ReplyDeleteThanks for the comment. I think I agree with you and am looking forward to letting you know how it goes. Take care,
DP
Financial Independence,
ReplyDeleteThanks for the comment. It is pretty exciting!
With how low mortgage rates currently are, and the nature of the rental market there, rent is about $200-$300/mo more than what a mortgage payment would be. Pretty cool. I'll include any passive income I receive to let you and the other readers know how it is going. Feel free to email me any time (dividendpartisan@gmail.com)
Take care,
DP
We have two homes we own, one we rent and the other our primary residence. I recently finished a refinance on both homes which will help us should the rental ever go empty. As it stands now the Lord brought us a long-term renter (3 years) at just the right time. Right now we are applying all our net profit from the rental home back into that house's mortgage. If we pay it off then all the rent is pure profit. If we sell it, we stand to make a significant profit. Win-win. We are our own property manager at this point; it can be annoying and time consuming but it is better than paying 10% of the rent every month to a company that may not have your best interests at heart. If/when we move, we'll reevaluate our need for a local property manager at that time.
ReplyDeleteBen,
ReplyDeleteThat sounds awesome. Very similar to what I would like to have happen and plan to do as well. Very cool. The only difference is I think I will use a property manager. One question I had for you was, if your two properties were in the same state? It sounds like they are..Take care,
DP
Four miles from each other actually.
ReplyDelete