The house that started it all. I had always had a general interest in real estate investing. I think most of us understand it intuitively and that is why it is so appealing. Buy the house, rent it out, and pay the mortgage, and that’s it. Or so I thought as an uninitiated investor. The house was purchased in November of 2012, so bear with me as I recall the details from almost a decade ago.
When I bought this house I was moving from California to Virginia, it was sight unseen, just took a new instructor job with the Marine Corps, and I was deep into the middle of a divorce. Oh, and it was next to a grave yard (the best neighbors I have ever had). You may have noticed there were a few red flags in the way I handled this purchase.
But, I had a plan. It had 4 bedrooms and 2 baths, had easy highway access, was close to major employment, and you could walk/bike 2 miles from the door to the shore. The plan was to rent out 2 bedrooms, have them share a bath, and charge 700 per month (utilities included) to cover the mortgage. Luckily I had given this some thought. And for the 4 years I house hacked, this plan worked flawlessly with 2 exceptions. My biggest mistakes were renting to friends, no contracts, and no formal background check process. With little more than a hand shake, a promise to pay, and not getting a creepy vibe I would let you rent a room. I should have been smarter, but I was green and nothing had gone wrong so I figured I could keep operating that way.
The first tenant I had a problem with ended up being less a friend, and more someone close to my social circle. Of course the person from my recreational beach whiffle ball beer league would be a good fit. Not so much. After the honeymoon period when they first moved in, the drinking did not stop after the games, and often started on the way home from work. This made the other tenant uncomfortable, and with no contract to enforce we had to just make it known they were not welcome anymore. I ended up losing one of my best tenants this way.
Lesson 2, be mindful of the company your tenants keep.
The numbers.
