Author’s Note: These are approximate values based on market estimates and our current mortgages. Real Estate does not liquidate quickly or cheaply. The actual value of all this could be 6-9% less if sold on the market today depending on a lot of factors.
At the ages of 27 and 28 our rentals have provided us with a net worth of over $400,000. The point of this statement is not to brag, or boast; it is to disprove the pessimists, or those who got hit in the financial crisis and bailed!
We are far from rich. My husband even said our recent house house purchase of $238,000 was too expensive and extravagant! But we still use credit card points to go on vacations, fly as cheaply as possible, and self-manage our homes for the added savings.
This past year I lived in a house for $650 a month in a not-so-nice neighborhood to make my dream come true! So there has been a lot of sacrifice to make this happen. The point is to go one step further. That $400,000 was not a gift or an inheritance, it was a lot of hard work.
The down payments were saved from living frugally: having roommates our first year of marriage, buying foreclosures and short sales, and A LOT of sweat equity. The point of this entire blog, is that real estate can be a terrific investment. I wrote this article because I was tired of all the articles in mainstream finance about how awful buying a home can be on your finances. Those who succeed don’t seem to advertise it!
So here, let me say it to the whole world: we have a net worth of $400,00 at age 27 and 28 because we are landlords.
I am the first person to tell you, if you buy a house you may not succeed. If you invest in TSP, 401K ,or 401K ROTH, in the Stock Market, Precious Metals, Oil, or any other investment mode you also may not succeed. Any kind of investing is a type of speculation and you may not succeed. Remember: the housing market AND the stock market were both hit during our last recession.
Here’s where mainstream financial wisdom is failing you: if you don’t invest your money somewhere you are also losing money. You have the lost opportunity cost of appreciation and interest earning. That is not even discussing the fact that inflation will eat you!
Real Estate is not for everyone. We don’t buy our dream house, we buy good rentals that meet our goals. There are going to be areas where renting is cheaper. The thing is right now in many areas it does make sense to buy. Here is an example of house #4 and how we would have saved OVER $17,000 in cash alone from buying over 3 years: Case Study: Renting vs. Buying – House # 4.
The point of this article is that houses aren’t bad! Yes, being a landlord can make you want to jump off a bridge, but let me tell you that having a husband deployed for 10 months or working full time isn’t a walk in the park either. The old saying , “Nothing comes easy,” exists for a reason.
Figure out what your goals are financially. Stay the course and be smart about your decision. Just make sure you are doing something more than staying debt-free! Not only do you need to be frugal and out of debt you also need to be building a financial future too!
How about you? How are you investing for your future?2
Kristina-Cents and Order says
Wow I’m impressed! I have a goal to buy a vacation/second home and rent it out when not using it. I’m definitely afraid of 2 mortgage payments! What percentage have you had to put down on your rental properties?
Elizabeth Bennett Colegrove says
We have put anywhere from 0% down (VA loan) to 25% for a rental home.
I’m wondering if you could clarify the author’s note at the top of the page. Do you mean that you would have $400,000 if you sold all of your rental properties whilst paying off all of the mortgages for those properties? I’d love to see a breakdown of how you calculate a tentative net worth with your current rental properties and mortgages.
Elizabeth Bennett Colegrove says
Exactly! If we sold all of our houses we would have approximately 400k of profit from our houses. We calculate our tentative net worth by taking the expected market value (its expected because until its sold its just a guess) – our mortgage. That gives me the estimated profit. Hope this helps! Good luck!
Hi! I used to blog, so I’ve read off and on for several years. I’ve seen you mentioned many times on the Military Landlord page on Facebook lately, so thought I’d pop over. Do you still have a regular job or are you only managing the properties you own? I’m wondering if one can actually make enough money off rentals to make it a job in itself. We have one currently that nets us $350 a month extra. We save it to put back in the house, obviously, but I’m wondering if we owned 5-10 houses with the same return I could make it my new career. Anyways, thanks for any tips!