This is in Pursuit of Financial Freedom the Newsletter that focuses on the four foundational items to achieving Financial Freedom: Saving, Multiple Income Streams, Debt Management and Retirement. Welcome to the new subscribers and welcome back to our existing crew. Thanks for tuning in. If you are reading the newsletter for the first time, why not click the button below?
If you have friends that love to read and interested in learning something new that tests conventional thinking, then why not share?
I began searching for my first investment property around the summer of 2017. I was living at home, saving money for over a year and I was ready to make moves (literally and figuratively). I wasn't sure whether I would actually move in or, if I would rent it out completely. All I knew is that I wanted to purchase a condo.
At the time, I was listening to a lot of real estate podcasts and doing research to help me make a decision. There are a lot of pros and cons to buying condos, but I essentially decided I wanted a condo due to the low maintenance requirements. As a first time home buyer and investor with a full time job, it seemed like the best option for me at the time.
I found the property on the MLS with the help of my family friend who is a real estate agent. After months and months (maybe 5) of searching I stumbled across one that I was not very sure about. There were three different flooring types (laminate, tile, and carpet), ugly yellow and green walls split by a white chair rail, dirty carpets that smelled like cats, and the outside facade of the entire complex was not pretty.
However, there were some positives as well. The location was great, the rental comps were good, the management company seemed okay and I met neighbors who spoke highly of the complex. Not to mention it had been on the market for 60 days - long enough to give me an advantage in negotiations.
The condo was originally listed around $135,000 and was reduced to $124,000. My initial offer was about $110,000. We ended up meeting in the middle and I moved forward at $117,000. The owners had purchased the condo the previous year for $118,000. I don’t know about you but I call that a discount!
The condo in three years has now appreciated over $170,000. Part of the appreciation is due to Covid and low inventory and high demand but prior to Covid it had appreciated above $150,000. I call that a great investment!
My first step after closing was fixing this apartment up. I painted the whole place in a modern gray color, I moved the washer/dryer from the 2nd bedroom closet to the hallway and had it properly vented. I removed the existing flooring (carpet, laminate, and tile) and I had beautiful laminate floors installed throughout. It looks fantastic!
Ultimately, I decided to rent out my condo to tenants. I plan to hold on to it for awhile as it continues to appreciate. Since purchasing, rents have also increased in the area by about 10% and continue to rise. With an initial investment of $20,000 (down payment and fix up costs) and a yearly profit of $3,600, I am making a 14% return on my initial investment. Not to mention monthly rent covers my mortgage, interest, taxes and HOA fees.
Overall the investment was a strong first one with invaluable lessons in investing, property management and landlording along the way.
I am looking forward to sharing more of my investments and investment opportunities with you. Until next time,
Amanda