Am I a success story? You decide.
My real estate business is different from most of your other readers because I purchased--not for income, but to help my daughters through college.
All of my purchases were buy and hold. I have never flipped anything. And I only have six properties! But I have used several different purchase strategies and money strategies, and made all of them work.
Now 12 years later, I am ready to sell off my business and take the gains. Here's how it happened.
Real estate is my retirement fund
I am in the U.S. Department of Defense Civil Service, just a low-level secretary, but with a steady secure government income. Instead of putting $2,000 to $3,000 in my IRA, in 2001 I started buying rental property--5% down, conventional 15-year loan, a 3 bedroom/1.5 bathroom from an out-of-town landlord.
Next I bought a 3 bedroom/1 bathroom from a real estate friend who was facing a balloon payment and had to sell fast. All the renovations were done, but he didn't have time to wait for a higher offer. Same as above, conventional loan with 5% down. That was win/win for both of us.
College student #1
The third property was a 1 bedroom/1 bathroom condo for my daughter to live in near the university. Found a tired landlord who was selling all her properties. This time I did an FHA mortgage because I could put my daughter on the title as an owner--as she was the owner/occupant.
The fourth property I secured on a lease option then sublet to my tenant. I paid the owners their mortgage payment and re-leased the home for $200 over that.
This is my "yuppie house" a 3 bedroom/2.5 bathroom w/cathedral ceiling and loft. I bought it 3 years later with a mortgage payment $200 less than what I was paying the owners, so I'm making $400/month cash flow.
I actually lease optioned that property several times, always taking the upfront money but eventually getting the house back when tenant/buyers couldn't fulfill the option agreement.
By 2005, my daughter in the condo needed a home with some yard for a dog, so I found a "garden home" on a zero lot line. It was a 2 bedroom/1 bathroom and had lawn on 3 sides--more than enough for a single college student to handle.
College student #2
That one was paid for with cash and is mortgage free. My 2nd daughter then moved from home into the vacated condo when she started at the university. That lasted two years until my younger daughter also wanted a "real home" and wanted out of the condo.
The 6th property was an estate sale and an out-of-state heir just wanted the property to go away. We went from the closing with the keys--and walked in to find everything still in there. Furniture, bedding, dishes, pots/pans, curtains, even clothing still in the closets.
Some frantic phone calls assured us that everything was ours--the heir didn't want ANYTHING. One of the keys was to a storage house in the back yard. There we found a lawn mower, weed-wacker, tools, ladders, several handmade cabinets and shelving, AND many toys from the 1950s in close to perfect condition. The things my daughter didn't want were sold for additional income.
Ready to reap the rewards
The condo was then rented to a tenant. For the past few years, the income from the four rental properties has PAID for the expenses of all six properties!
I've been able to allow my daughters to live rent-free in their homes while they were students. Both have now graduated college and are paying their own expenses.
So now after 11 years, I am ready to sell my real estate business and take my gains. The first two properties bought on 15-year mortgages only have $23,000 and $26,000 left owed to the bank. I hope to make about $50,000 each.
The yuppie house mortgage was rolled into the loan on the "everything-in-it" house, so it is totally paid off, and I have the title. Sale of that property should bring in $100,000 which after closing costs is all mine.
I will retire from the government job this year with full pension and head for the Caribbean! I have a hunger for beach and palm trees, and I have already found two properties--one in Belize and one in Mexico.
I will keep the condo as my pied-a-terre here in Texas, where I'll return several times a year for birthdays and Christmas with the girls.
After only 12 years, I will have managed to buy both my daughters a home, keep one (small, manageable) for myself, and fund my retirement on the beach and for years to come.
I stayed small. I never had spendable cash flow, as I used all the income from four to pay the costs of all six. But was my real estate investing a success story? You tell me....