I have a great inspirational story about how we purchased our first real estate investment. I hope this will help encourage anyone who is having ignorant opinions forced on them by negative people. I have changed the names of the people involved in case anyone reading this happens to know any of them.
My wife, Renee, and I were living in a house that her parents owned. For quite some time, we had been talking about buying our own place and also buying some investment properties. Renee had mentioned to her mother, Patty, that we wanted to get into real estate investing. She responded by saying that we would never be successful because I am not a “go-getter.” She also told Renee that we couldn’t buy property because no bank would give us a loan with less than 20% down.
That was it for me. I decided that we needed to stop just talking about it and do something to make it happen. I got a copy of our credit reports and started shopping around for a mortgage. I found a first time home buyer program that would credit us 4% of the purchase price as a grant. Our FHA loan only required a 3% down payment. We decided that we wanted a duplex, so that we could buy a house for ourselves and gain experience as landlords at the same time.
Next we met with Arnold, an extremely helpful real estate broker who had shown us some property a few months before. After analyzing the cash flow of a few of the properties we decided to put in an offer on the one that looked the best.
We didn’t tell anyone else that we were doing this. We didn’t want to have to deal with other people’s negative input. We figured that it would be harder for them to tell us what we can’t do after we had already done it.
The night after we put in the offer on the duplex, Renee and I went out to dinner with Patty and her friend Sarah, who happens to be a real estate agent in town. On the way home, Patty brought up the subject of real estate investing. She mentioned that Renee’s younger brother was interested in buying some rental property.
She went on and on about how great it was that he has an interest in investing and how well he is going to do with it. Then she started to talk about how she is going to buy several properties around town.
I was really irritated. She thought that real estate investing was the greatest idea in the world for everyone else but, when we mentioned it, it was the stupidest thing she had ever heard. It was obvious that this conversation was directed at us. She thought that she was so much better than us, and she wanted to rub it in. I got more and more annoyed as the conversation continued.
What happened next was absolutely amazing. Sarah started telling Patty about a duplex that was for sale on Main Street. Renee and I looked at each other and wondered if it was the one that we had just made an offer on. She continued and said that it was a 3/2 in the back and a 2/1 in the front and the tenants of the two units were sisters. She was talking about our duplex!
She continued on and said that the property had excellent cash flow and should have been listed at a higher price. Patty said that she wanted to look at the property and that she would probably put in an offer on it. Sarah told Patty that she would have to move fast because someone had just put in an offer and she thought that the sellers might take it. The way she said this made it sound like the offer was made by some super-sophisticated, hot-shot investor.
Patty and Sarah didn’t realize it, but they were talking about our offer! Renee and I couldn’t believe it. We didn’t say a word the rest of the way home.
The next day Patty mentioned that Sarah was going to take her to look at the duplex they had talked about. At that point we did not have an accepted offer yet, so we kept our mouths shut.
After a few counter-offers, we got the price we wanted and we also got the sellers to cover most of our closing costs. After the offer was accepted we told her parents, who were surprisingly supportive. Our out-of-pocket expense for taking over the property was under $350 (which was considerably less than 20% down, I might add).
We painted the duplex inside and out, moved all of our things and selected a new tenant in less than three weeks (the former tenant was getting married and moved out right before the closing).
I realize that this wasn’t the most creative deal in history, but the point is that we ignored all of those negative influences and we did what we set out to do. Every morning when we wake up in our own house, it reminds us that we are the ones who choose what we can and can’t do and that negative people are only right about us if we allow them to be right.