Sharing Secrets on How We Bought Four Properties in 2.5 Years

Table of Contents

Becoming A Home Owner And Helping My Friend Buy A Home Too – 2 Homes and 2 Rental Properties

Renting vs. Home Ownership

Back in the day when Facebook didn’t own Instagram, and when Amazon was still crushing Mom and Pop shops around America through low dollar-cost averaging and automation (circa 2015), I was a renter.

Like a lot of other people, I had no clue about home-ownership. Besides the headlines on social media and the #cancel culture outrage, I didn’t do any research. When I asked around (through FB post), I was simply asking my peer group of non-homeowners and lifestyle credit card spenders.

Homes cost too much, I’m waiting for the Next Housing Crash.

These conversations were laced with pessimism, fear, and ignorance. It is ok to say ignorant because we didn’t know enough. We were figuring out life and filled in the blanks along the way. Instead of a group of motivated and optimistic purchasers and creators, these interactions fostered a never-ending cycle of renting and consumerism. “The Bling leading the Blind.” It was unfortunate.

By the grace of God, I was able to break the internal monologue.

According to GoBankrates.com, you need about $143,000 to live comfortably in Washington, DC if you’re paying a mortgage and $122,900 if you’re renting.

About 43 million American renters spent about a record $475 billion on rent checks in 2015, according to a report from real estate database from Zillow. That number steadily increases by about $5 billion per year.

While most complain about finding the deposit, as of 2018, millennials (age 23 to 38) racked up an average of $27,900 of personal debt through credit cards and/or personal loans. The old Post to Flex generation that can’t seem to stop the YOLO and complaining later.

Renting my way into Debt

Looking back at my Excel Sheet for 2015 (cited above), I was only bringing in less than $45,000 after taxes and 401k investments. At that rate, it seemed like my social network was right. There was no way out.

At the time, I was renting in Columbia Heights (Washington, DC) for $1,000 per month plus my portion for utilities/internet in a 5 bedrooms, 2 crummy baths situation.

Free resource: Money Management estimator

I stumbled on an article that stated “cutting costs like my everyday coffee didn’t amount to the seismic change that I needed”. They were right on the money.

By the end of 2015, I moved far away to the suburbs with an unlikely roommate, into 2 bedrooms and 2 bathrooms condo at the end of the metro line. She had a clipboard full of inappropriate questions even insinuating that I might do (recreational) drugs.

Yo! I’m a government employee and a veteran of the US Marine Corps. Drugs are the easiest ground for being fired or kicked out. Besides those things cost money.

I paid $550 and I had my own bathroom, a balcony, and fireplace. The commute isn’t entirely easy but it’s not half bad considering that my job pays for my transportation fees. The total for my housing cost dropped to about $700 per month. I know people paying over $1.4k for rent in the DMV, I was winning. With the extra savings, I was able to get a hold on my credit card payments and started saving even more of my income (to the tune of $2k-$3k per month). I received promotions and raises but my total expenses stayed the same, and in some years improved.

Buying My Way Into Wealth

By October 2016, I was able to buy my own affordable 2/2 unit in the same complex for $132,500. It isn’t a big condo but it’s the condo that allowed me to amassed a fortune. My total mortgage plus HOA fees was $1,000. My utilities were about $150 per month (see screenshot above). Even after spending on trips to Canada and Brazil.

Taking a page from the 8 Ways to Save on Rent and Homeownership, I used some househacking and rented out the second bedroom to a friend of mine for $625. This single act saved him over $750 per month (versus the alternatives) and reduced my housing expenses by about $700 per month. The other unintended consequence and benefits, since we weren’t close to the restaurants and casual brunch options, it was hard to spend the money frivolously. I was forced to meal prep.

Loaning Toward Home-ownership

I could have stopped there but then I received a call from one of my best friends. He needed to borrow money, $15,000 to be exact.

This was more sensible than his Black Sparta idea of coming down from the roof onto a live stage in college. Guess that’s a story for another time.

Against all conventional financial rules and against Dave Ramsey’s authoritative Baby Steps, I withdrew $15,000 from my TSP (govt. 401k) as a loan (which didn’t include any fees at a repayment of 2%). We drafted a contract for him to pay me back in 2 years. He has a great track record so we went forth into uncharted territory.

He paid me back in less than 2 years.

Ownership of Wealth

Post homeownership, He lowered his rental housing expenses from $2,200 per month to $1,300 per month. Not bad for SoCal living. With the extra amount, he paid me $250 monthly and extra when he received his bonuses. The peace of mind of homeownership is incredible. This is still one of the best decisions that I ever made in my life.

By the start of 2018, I purchased a rental property in Florida with my mom, and by summer 2019, he purchased a duplex in St. Louis (cash flow of $150 and $750 respectively).

Yes, he is making more money than me now. Like way more money. Insert happy face emoji. Even though, I’m salty.

We plan to purchase a shared rental unit in late 2020. When the math makes sense, you just go for it. Not bad for two Haitian Americans coming from Miami, Florida and living the big city lifestyle.

Takeaways:

As of 2019, I own one condo and a rental unit (out of state). My buddy owns one condo and now a duplex (out of state). The positive equity minus the amount owed on our homes are valued at $50,000, and $75,000 respectively. When people say it can’t be done, I believe them because they won’t do it. However, I don’t believe in being average. My current take home is $52,000 and my expenses are still $32,000 (even after traveling to 15 countries) with two mortgages.

There is a financial order of operations if you follow it, you will be just fine. If you don’t… You will earn the same results. Kanye Shrug I try to encourage others to change by writing these articles and sharing the triumph. It happened to me and my buddy. We are currently doing a friendly contest to see who can make it to $1M net worth first. I’m going to do so by the end of 2025 or early 2026.