I am very excited to submit our very first real estate investing success story. After raising three children and owning a house of our own, we became heavily in debt from our money mismanagement and ignorance of how to achieve financial stability–to say nothing of abundance creation.
The mortgage company had started foreclosure proceedings on our house, but we were able to sell it before the auction. Shortly after, we declared bankruptcy. For the last six years, my husband and I have been educating ourselves on how to build a comfortable lifestyle for ourselves, with the help of Creative Real Estate Online and Robert Kiyosaki’s book Rich Dad, Poor Dad.
The emotional and mental growth we achieved by aligning ourselves with principles of harmonious living set the stage for our eventual success in our first real estate venture. We realized that our money troubles didn’t happen because of high taxes, the economy, or some other outside force.
Our severe financial troubles came about because of us–our beliefs about ourselves and what we deserved, what was possible for us, that things were out of our control, that we must work really, really hard, that we weren’t smart enough, etc.
For us all that had to be dealt with before we were ready for all the great financial education that is available. We wish it didn’t take that long for us to wake up, but it did. So with that, here is the making of our first real estate deal:
My husband heard about a condemned two-family house in town that he really wanted to buy. It needed a heating system, plumbing, LOTS of repairs. My husband is an electrical contractor and has been in the trade for years, so knew he could do the repairs himself, except for a few items.
He could see what was behind the mess and neglect; I couldn’t at first, but I trusted his instincts. After two months of back and forth with the owner, we finally signed a contract for $31,000. We found a hard money lender in town who lent us the $31,000 for the purchase of the property, plus $21,000 to fix it up and would be paid back in six months.
The only money we had to come up with was $150 for the hard money lender’s lawyer fee to draw up the contract We paid the hard money lender interest payments, and he let us pay the $2,500 fee to borrow the money when we paid off the note.
We went to work on the second-floor apartment, where we were going to live. With the help of our two sons, we miraculously were able to move in two months later to a beautiful three-bedroom apartment.
In February, we refinanced the property with our credit union for $62,000 (including closing fees) paid off the hard money lender and some credit cards we used when we ran out of fix up money, and pocketed $350. We finally just finished the first floor and rented it out within two days of placing the ad.
The house is now worth at least $140,000; we have a tenant paying $750 per month. We just experienced the joy of having someone hand us his first month’s rent–not to mention the security deposit and last month’s rent, which by the way was collected before our first payment was due on our new mortgage with the credit union.
Our mortgage payment is $547.97 which includes principal, interest, taxes, and insurance. Our tenant will be paying our mortgage payment plus.
We are excited and looking for more. We did all the work ourselves, but would still have made out very well if we didn’t have the know how and had to hire someone to do the work.
Thanks for all the great “how-to” articles and resources. We plan on making it to the Creative Real Estate Online Convention next year. I really wanted to go this year, but we were working hard to get this project finished.