Your First Rental Property

It’s official: Kim and I moved from Portland to Corvallis, Oregon. We closed our house – a 1964 daylight ranch with a completely converted basement – at the end of August and spent the last six weeks moving and unpacking. I thought I had time to post the bloody details of our purchase, but that obviously didn’t happen. We were too busy!

The short version is this: After bidding $ 128,000 when we asked for our dream home (and still lost to a cash offer), we were on the verge of entering into yet another bidding war for a similar home. But we didn’t. While other people were bidding from $ 589,000 to $ 707,000, for $ 680,000 we snuck into a house we liked better – just $ 5,000 above demand. We were lucky.

And while I was concerned that we might experience buyer’s remorse, I’m happy to announce that it absolutely did not happen. We love our home and we love Corvallis. How could we not?

Corvallis is the best bike town in the state of Oregon. (Yes, even better than Portland.) Our home isn’t a hiker’s paradise, but it’s within easy reach of two grocery stores and a handful of restaurants. Corvallis has hardly any traffic jams. The city is surrounded by wooded foothills with hiking trails. Every day we have squirrels and deer and wild turkeys in our garden. There are two leash-free dog parks nearby. Our neighbors are super friendly.

I could go on but I won’t. You get the picture.

We had high expectations for Corvallis, but the city has exceeded them so far. I am not joking. This is exactly what Kim and I were looking for during our three-month search for an apartment. It’s our Stars Hollow.

And although our house is huge for two people, it also exceeded our expectations. Sometimes it feels like it’s tailor-made for both of us and our lifestyle. At the beginning, I know, but after six weeks we’re satisfied.

A tiny real estate empire

Kim and I also like that we’ve started making friends in town. For example, I’ve spent some time with Jeff from The Happy Philosopher, and Kim takes weekly dog ​​walks with one of the neighbors. Last weekend we enjoyed happy hour with our real estate agent and his wife.

Michael and Rae have lived in Corvallis for maybe ten or twelve years. During this time, they stumbled upon the idea of ​​”financial freedom” without ever discovering the burgeoning FIRE movement. (FIRE is a crude acronym for “financial independence and early retirement.”) Like many others who eventually found FIRE, these two invented their own version in a vacuum.

Michael and Rae are slowly building a tiny real estate empire that currently comprises six houses. They buy an apartment, live in it while they make improvements, and then rent it out when they are ready to buy another property. Their goal, which they are approaching, is for the cash flow from their rents to meet their monthly expenses.

Michael and Rae's real estate empire

Last week Kim and I grilled Michael and Rae over their experience over cocktails and appetizers at Magenta.

“Now that we’ve settled here in Corvallis, we’ve started talking about buying rental properties ourselves,” I said.

“I just turned 49,” said Kim. “My years as a dental hygienist are taking their toll. My back hurts. My shoulder hurts My wrist hurts. I want to find a way to make money without killing myself. “

Michael nodded. “We like to share our knowledge,” he said. “But you have to understand that this is not a magical route to wealth. It’s work. Maybe not the same kind of work as now, but it’s work. And it takes time to build a source of income. “

“I see,” said Kim. “I get it. It sounds like you’ve found out. Didn’t you tell us that you only rent to college students? And that they come back year after year?”

“We don’t just rent to college students,” said Rae, “but mostly to college students. At the moment one of our six houses is rented to a “normal” family. But you’re right. We were fortunate to have a low tenant turnover. “

“We try to have long-term relationships with our tenants,” said Michael. “We don’t want to be their friends, but we want good communication. We want them to come back every school year. This often means that we will not increase their rent. Or, if we do, it’s a very small increase. “

“That’s smart,” said Kim. “That makes your tenants more loyal and prevents fluctuation. The turnover is probably tough. “

“It is,” Michael agreed. “We prefer to keep our tenants renting just below the market price than worrying about sales every year. When someone moves out, we can adapt things to the market. Plus, building strong relationships with our tenants seems to help keep them motivated to look after the home. And we are beginning to see that it helps when her siblings come to school in Corvallis. You contact us because your brother or sister has had good experiences with us. “

“I like your ethical approach,” I said. “And when I hear you talk about it, I want to know more about real estate investing.”

“You know I want to learn,” said Kim. “I’ve been saying that for years.” (She has!)

“You know,” I said, “a lot of my colleagues are into real estate investments. I’ve talked to them about it, although I’ve never followed it myself. Are you reading one of the real estate blogs? “

“Not really,” said Michael. “But I know Paula Pant from Afford Anything. I like their things. “

“Paula and I are good friends,” I said. “We have been close since 2012 and often call or text us to find out about life. In fact, we hung out at Fincon in Austin last week. She asked me to promote her real estate course. “

“You should do it,” said Michael. “I didn’t see the course, but she has solid information on her website.”

I thought for a moment.

“You know what to do,” I said. “I should help Paula promote the course, but more than that, I should do the course for myself. I should take it so I can learn about real estate investing. “

“Yes, you should,” said Michael. “Not that I have ulterior motives for buying more real estate from you.” We all laughed at that.

“Do you know what would help?” I said. “Whenever a rental property comes on the market, you send a video that analyzes its potential. I love them, even if I don’t understand everything you’re talking about. I particularly like the spreadsheet that you use to calculate the numbers. “

“That’s no surprise,” said Kim.

“Would you be willing to record a YouTube video explaining your rental property table?” I asked. “I could play with this table myself while attending Paula’s class.”

“You can bet on it!” said Michael. “I’ll be recording a video for you next week.” And that’s exactly what he did. Here is Michael explaining the chart he uses to review potential rental properties.

Your first rental property

I recently read Todd Tresidders How Much Money Do I Have to Retire? Maybe at some point I’ll write an extensive review of the book. Most importantly, right now, Todd thinks it is a bit risky to use the four percent rule as a measure of financial freedom. He convincingly argues that it is much safer to define financial independence like Vicki Robin in Your Money or Your Life: the point where your passive income exceeds your expenses.

While my recent move to Corvallis has made me financially independent again within the meaning of the four percent rule, I am financially not independent of cash flow. My expenses exceed my passive income. I want to change that. And I think rental properties could be part of a strategy for that.

Your first rental property

This morning I signed up for Your first rental property, Paula Pant’s real estate course. Reading the sales text on the landing page was entertaining. I generally hate sales pages, but it was like Paula wrote this page for me. It sounds like the course is perfect for my needs.

I think it helps that I know Paula personally. Over the years she and I have talked a lot about their various real estate adventures. I watched her slowly build up her rental portfolio. I also know that she is both smart and trustworthy. If I pay someone for a real estate course, it’s Paula.

I also like and trust Chad Carson. Coach Carson’s real estate courses would also be a good option, and I might even check them out myself in the future.

Here is the thing. I get a lot of inquiries to promote books, courses, and events here at Get Rich Slowly. I almost always refuse. I never wanted this to be a platform for promoting products. I want GRS to be a platform for education.

Even so, I enjoy sharing books and events that I believe you will find valuable. That’s why I’m interested in Ramit Sethi’s I Will Teach You to Be Rich. Because of this, I was personally involved in this year’s EconoMe conference and I encourage others to join us in Cincinnati next month. Some of this is great and should be shared.

Of course, I can’t vouch for the quality yet Your first rental propertybut i only spent my own money buying it. (“Did you want to buy the course?” Paula’s assistant sent me an email. “Yes,” I said. “I want to do it.”) I will ask Kim if she would like to work through the course together. I think it would be fun to do as a couple!

And who knows? Maybe in a few years we will have acquired our own rental properties …

Your first rental property, like many online courses, has a limited time window. (I think Paula only offers it once a year.) Sales for this cohort end on October 14th. Get Rich Slowly earns a commission on every sale made through our website.

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