I graduated college, moved back home, and was hired for my first teaching job. I played by the book.
Luckily, a few of my good buddies from college also lived locally, making the transition to the working world a bit easier. Towards the spring of 2005, one buddy suggested we look for an apartment. I found the idea of paying rent appalling, so I suggested we buy a house.
Unknowingly, my subconscious was already hunting for passive income.
I hoped to buy the house and have my buddy pay rent to me. He seized upon the idea, and wanted to be an owner as well. So just like that two friends with only months of employment history, no money for a down payment, and no commitment to each other, decided to be homeowners. Lucky for us, this was 2005 and in order to get a mortgage you really only needed to ask.
After forking over about 1,200$ each for closing costs, we settled into a nice 3 bedroom, brick townhouse on a tree lined street in Lancaster, PA.
Our purchase price was 82,000$. We quickly rounded up some new to us furniture, and agreed to almost never clean the bathtub. I had no idea how quickly a tub could get dirty, I mean I use soap in there, wasn’t I cleaning the shower each time I bathed? I also experienced significant consternation in the kitchen. Every evening, I’d start to feel hungry, which always seemed to surprise me, and the thought, “what’s for dinner,” would occur as if for the first time.
I’d walk to the kitchen, look in the freezer, and find everything frozen.
Even now, sitting to write this over 10 years later, I can still feel the disappointment and hopeless feeling. Eventually, I thought to let some food thaw. I would then choke down a plain, unseasoned chicken breast, grilled on a never cleaned George Foreman grill. Somehow, my chicken never looked like the George Foreman commercials. I blamed the grill. I would then add some boiled vegetables from a bag, and choke it all down, just for the nutrients.
I hated myself between 5:30 – 6:30 every evening.
It was around this time that I dreamed of inventing something like dog food for people, then I could just eat it at every meal. Enough about my sorry diet, I was now earning some cash from this living arrangement. We took in another roommate for the incredible rate of 200$ per month.
Each month he gave us 100$ each and my real estate empire was born.
Soon another guy wanted to live in the basement, doubling my passive income to 200$ per month. This basement guy turned out to be a closet alcoholic with a wacko girlfriend. Thus my empire became the scene of semi-frequent police activity. Somehow, the cash in my hand each month erased my memory of these negative events. Eventually, we caught him stealing our spare change, and had to give him the boot. He gave us his key, and walked out into the rainy night, he took nothing with him, and never came back for most of it.
He did provide me with my first thoughts that I should screen my tenants.
At some point between searching for quarters and chowing down on poorly cooked chicken we tested our co-habitation arrangement by embarking on several renovation projects. We paid through the nose to have a national chain install a new shower surround, but we knew nothing, and we were excited that they could finish in a day. They didn’t touch the toilet, but my cash flushed right down.
From this point, we decided to be do-it yourselfers.
We removed the living room carpet and linoleum in the dining room, rented a drum sander and brought the wood floors back to life. We finished the floors in extremely hot humid weather, forcing us to tiptoe around while the floors were still sticky, fortunately the finish showed no ill effects. We saw a nice picture at the paint display of the hardware store, and had our paint scheme picked out in minutes. Painting was a breeze as we had few things hanging from the walls. We expertly painted a section of the ceiling glossy white and were forced to mostly ignore this mistake, as painting white on white is like trying to find four leaf clovers in the dark.
Now that we felt comfortable we took a major swing at the kitchen.
We ripped up the floor, only to find a tar like goo making the old wood floor a lost cause. So we picked out some 12×12 ceramic tile and went to work. We then removed the kitchen cabinets and ended our relationship. Not really, that is just how the bank treated the situation. My buddy wanted to move out to save up some money for his wedding, and I wanted to keep the house. (Maybe we should have left up the kitchen cabinets for a few extra days.)
Thus, the bank pretended we were getting a divorce.
The appraiser came by, took some pictures, pulled his jaw off the kitchen floor, and stated, “oh some renovations, we’ll just assume that’s finished.” This was my first inclination that home appraisers really just carry around a broken camera and make stuff up. The bank then refinanced the property into just my name, rolled the closing costs into the new loan, and allowed me to once again bring no money to the deal. They cut my old roommate a check and everyone got what they wanted.
I was now the sole owner of my first home, albeit one without a kitchen.
Taking a break from the kitchen remodel, I scampered off to Europe for a two week adventure. This was unfortunate timing as I still had a 3rd roommate, who now didn’t have a kitchen. I eventually finished the kitchen remodel, got engaged, and got married one week before my old roommate and co-owner. Things worked out perfectly.
My new bride moved in, and it turned out I actually owned a nice house.
Is amazing what blinds, curtains and a few smartly placed wall hangings can do. We lived comfortably in the house for about three years before moving to our current location. The property now rents for 950 per month. This property has taught me some of my most interesting landlord lessons which I will share more about in a later post.