My first investment property I was ever involved in was before I ever owned a place for myself. I was living in my dad’s duplex while I was going to college. I was lucky, he paid the bills, and I paid for my college. He lived somewhere else, although it was close by. This is the story of how I became the owner of my first property.
My father was a real estate broker, and had been for quite a while by then. He was retired from the USAF and after a few other sales jobs, settled on real estate. On one day, while I was visiting him, he suggested that I partner in a 4-plex with him. It was four, 1 bedroom apartments in this building, already rented. The sale price was $73,000 on a contract for deed. My father needed $5000 for my part of the down payment. I am not 100% sure how old I was, but I was probably about 25, and still in college (after a 4-year stint in the military).
Initially, I thought this would be a great deal. I thought my father was giving me a perfect, risk-free way to invest in real estate. I was sure he was an expert. After the purchase, I helped with some of the fix-up work. We had to hard-wire smoke detectors and do some other work. Some of the renters expressed concerns about some of the new tenants moving in were not as solid as the ones who were there for a long time. I really didn’t know much about tenants, or screening, and neither did my father.
Since I was in college quite a bit of the time, I was not involved in the day-to-day operations of the building, although I did help with some repairs periodically. I remember him telling me that one tenant that was kicked out, took the refrigerator with him when he left. One day, after I had not heard about the building for a while, I asked him how it was going. He told me he let the property go back to the Contract for Deed holder. Since I was never on the property as an owner, I was not required to sign any purchase or sale documents. It was my first real estate loss. To be honest, I felt a bit tricked.
Eventually, the property was bought by a State Representative, who received state money to turn it into a 2-plex and the Reps parents moved into it after it was fully refurbished. So, the State spend about 3x what the property was worth and basically gave it away as part of a city/state sponsored home ownership program.
Do you own any property? What were your considerations before the purchase to swing you to make the purchase.
Wow. I’m surprised you stuck with it after that experience. A lot of people would have taken one bad experience and decided it was enough. Kudos for sticking with it.
I kept at it even though it was a bit of money. I am going to write about properties 4 through 8 in the coming weeks.