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Real estate is a very hot investment topic and an incredible tool to help achieve FIRE (Financial Independence Retire Early).
“Ninety percent of all millionaires become so through owning real estate.”
Andrew Carnegie
Many think a lot of money is needed to start investing in real estate, but this is wrong.
You may have heard of people who have achieved great success in real estate investing. Our success may seem small to some but we would like to share our story.
When we purchased our first real estate property, we were just college students at ages 21 and 23. We did not have a lot of money and did not have high-paying jobs!
We started our real estate investment journey with only $20,000.
Now $20,000 has become $250,000 in 4 years while going to school.
We have bought three properties total but sold our first one in order to graduate student-debt free!
Related content: 11 Tips That Helped Me Graduate Student Loan Debt Free With One Kid
We don’t have a lot of money, so there is no way we can afford to buy rental property directly like some people or spend a lot of money to hire professional contractors to do remodeling.
Our real estate investment strategy
- Buy as owner-occupied (residential property).
- Do some easy remodeling while living there.
- Save up a downpayment for the next property.
- Buy the next house and rent out the previous one.
Now I’d like to dive into our own investing experiences!
I hope our stories can provide you with knowledge and inspiration for your own investing journey.
First Real Estate Property – Townhome
Shortly after my wife and I were engaged, we started to discuss whether to rent or try and buy a place after we were married.
My in-laws owned real estate in China so my wife possessed a very great investment perspective – regardless of us just being college students.
Many people would tell me, “Just rent! most college couples rent then slowly build up to purchasing their first home”.
My wife would tell me she would not pay rent to a landlord. This will be our first property and not our forever home.
So we decided to buy a place to rent out in the future!
She also mentioned the location we were looking at was an excellent location – close to two colleges!
The townhome we found was $100,000. It was an older, cute townhome built-in 1970 with two bedrooms and 1.5 baths.
The previous owner had some nice remodeling done such as repainting and new flooring.
We were so happy when our offer was accepted!
In total, our downpayment was $20,000. Since the downpayment was 20% of the house price we did not have to pay mortgage insurance, woohoo!
Our monthly mortgage payment was around $850 with HOA, taxes, etc.
I still remember on closing day when the employee at the title company said, “wow! your monthly mortgage payment is even cheaper than couples who are renting!”.
After living at the townhome for a little over one year we bought our second property (condo) and rented out the townhome.
We did some simple remodeling on the townhome such as switching old appliances to new (most affordable) ones, repainting, fixing some damages, etc.
The enhancements and repairs were really just simple. The total expenses occurred from this were around $4,000.
We were happy to find a very nice newlywed couple as our first tenants! The rental income was $1000 a month which gave us $250 extra cash flow each month!
We had been renting it out for around two years then in order to graduate debt-free, we sold it for around $140,000 total.
The original price we bought it for was around $100,000.
Second Real Estate Property – Condo
Before buying our second property (condo) I had received a job offer as an account manager at a financial software company.
At that time I switched all of my college classes to online so my schedule could be more flexible.
Upon receiving the job offer we started looking for another property in Utah. We decided only to do a 5% down payment for a new property.
The reason we didn’t do more than 5% is that we did not have a lot saved and we wanted to purchase a place as soon as possible. The housing market at the time was quite hot.
We knew the sooner we could close the sooner we could start building equity.
Being our second property, we could only apply for a conventional loan with a minimum requirement of 5% down.
We also had to pay PMI (mortgage insurance) since the down payment did not reach 20% of the loan’s total amount.
The process to find our second property took a little longer and we actually got outbid once!
We eventually found a cozy 3 bedroom/2 bath condo built-in in 2002. The previous owner had new painting and flooring done which made the property very attractive to a young couple like us.
The location was also very close to our college, our first property, and my new company.
On top of that, the condo was also only 3-5 minutes from Walmart, Costco, and other shopping districts! Talk about a great location!
The total price of the condo was $171,000. Our down payment + closing costs were $10,000 total.
The monthly payment with HOA and mortgage insurance included was just about $1,200.
When COVID-19 happened, the interest rates dropped significantly. We noticed these amazing interest rates and decided to refinance this condo!
Related content: The Refinance Process (Our Experience)
After refinancing, our monthly mortgage payment went down to around $1,000 (with HOA fees), saving us $200 a month!
After living in the condo for around 2 years we rented it out for $1,300. This gave us around $300 a month in cash flow!
Similar to our first property, we did some simple remodeling before renting it out.
We painted all the old cabinets fresh white! Painting is the cheapest remodel method and only costs us $100.
The microwave broke when we lived there so we bought a new one which was under $200! It was a returned one at Best Buy but had no issues. They had a hard time selling it so the Manager gave us an extra discount 🙂
Currently, we are renting out this amazing condo.
We checked condos in the same community and found the value of our condo has increased by at least $100,000 since we purchased it.
We are so grateful for the equity being built in this cute condo.
Third Real Estate Property – Single Family Home
Originally, we were not planning to buy a third property anytime soon. The plan was to wait until I graduated first with my MBA.
We started to look around at different builders just for fun. One of the builder’s sales agents wrote down our contact information and within one week he told us new lots were being released soon.
Since the location was close to my parents’ house, we decided to check it out but still just for fun.
Two days later the agent told us there would be a price increase of $5,000 for any new homes built. Any contract signed within the next few days would keep the lower price.
We thought it through and decided to go under contract.
The prices had been steadily increasing and we felt it would be a good decision to lock in – especially since the house-building process takes many months.
The new home was under construction in July of 2020. The building process was very interesting and took ten months to finish.
We officially closed on the house / third property in May 2021!
The total price of our new single-family home was just around $340,000 (with upgrades included).
We only did a few upgrades and chose the cheapest home base model so we could have a very healthy cash flow.
The square footage of the home is 2,300 with a lot size of 0.12 acres. We put down a 5% down payment which cost us $20,000 total.
Our locked interest rate is 3% with mortgage insurance being about $35. In total, our mortgage payment each month is $1,600.
We finished our entire yard 2 months after we moved in to welcome our sweet Samoyed puppy named Tofu!
Now we are working on furnishing our 833 sqft basement before our daughter is born. It’s a lot of work, but I’m learning many valuable handyman skills! 🙂
The cost for finishing both our yard and basement will be approximately $20,000. A lot we did by ourselves but some parts were hired out.
We have checked the current prices for the same home (model) as ours in our community. Especially with the basement and yard finished, our third real estate property has increased at least $100,000 in value.
Conclusion
The story above is of our three real estate properties that we bought in the time period of 4 years while in college.
You can see that we didn’t spend a lot of money to renovate our first two real estate properties.
There are two reasons for this –
- I did not have a lot of handyman skills back then.
- As college students, we didn’t have money to hire contractors.
But still, we make some nice profits! Just try your best to start saving now for a down payment!
One more thing I want to say is that we are also been very fortunate.
The past few years have been a very good time to invest in real estate in Utah. We were able to buy a house when the price was still relatively cheap, and then watch it increase in value.
The value is still increasing and having rental income as passive income is an amazing thing!
We are so grateful we have been able to see our real estate investments jump from 20K to 250K in 4 years during college.
We do not place all of our investment eggs in real estate but it has been a powerful FIRE tool!
We’d love to hear your thoughts! Feel free to drop a comment or question below.
Disclaimer:
We hope the information in this article provides valuable insights to every reader but we, the Biesingers, are not financial advisors. When making your personal finance decisions, research multiple sources and/or receive advice from a licensed professional. As always, we wish you the best in your pursuit of financial independence!
