How We Found and Funded Our First Rentals (Low Money!)

One messy, imperfect, low-cash-flow rental propertyOn this episode of Real Estate Rookie, we are going to be breaking down our very first deals. Welcome to the Real Estate Rookie podcast. I’m Ashley Kehr.And I am Tony j Robinson. And today you get to hear the origin story of Tony and Ashley. So we’re both going to break down how we got started and what our deals look like, what lessons we learned, and maybe what even we do differently. If we were starting over today, we’ll put that in there as well. So we’ll talk about how we found our deals, how we funded those deals, how we went through our renovation periods, how we stabilize those assets, and then hopefully all of our Ricks that are listening get some good lessons learned.We definitely have some lessons learned to share. That’s for sure. So Tony, I think because your first deal is kind of famous on the podcast, for all of our OG listeners, hearing me stumble over Freeport, Shreveport, Shreveport for so long when you had your rental property there. Let’s start with that property, your first deal.Funny enough, I was actually just back in Shreveport for all of our Ricks who were listening. I was just back in Shreveport this past weekend because my cousin got married there. She just so happened to marry a guy who grew up in that city, a small world, but I drove by that first rental and I was like, man, this is the place that started it all. And it was nice to kind of get back there. But in terms of how I found it, I live in California. I decided to invest in Shreveport, Louisiana because my mom and my stepdad had briefly lived there. After they retired, my stepdad had some family out there, so they were, I think two years they were out there. And while I was here visiting them, I was like, man, real estate is really cheap here. And I said, let me look around and see what I can find.
And I spent some time getting to know the neighborhood while I was out there visiting them in my rental car, driving around aimlessly, just trying to get a better sense of the neighborhoods and where the kind of lines were between the A class and the B class, the B class, and the C class. And what were some of the neighborhoods that maybe didn’t want to invest into. I met with property managers, I met with a couple of agents of the couple of different banks and really just got a good lay of the land and I was able to within this big city, land on a couple of zip codes that I felt made the most sense for me to invest into.Tony, before you even had the deal and you’re meeting with these key people to build your network, how do you start those conversations with people when you don’t even have a deal yet?Yeah, it’s a great question. And I was just honest and said like, Hey, I am a W2 employee. I’m looking to buy my first real estate investment here in your town. What should I know? Here’s what I’m thinking about buying. What are your thoughts? What are your thoughts on this neighborhood? What kind of product should I be looking for? I think honestly, one of the best conversations that I had in terms of getting a better understanding of the city was talking to the property manager. He and I met for coffee at some local coffee shop, and they have such a strong working knowledge of their city of rents, of what kind of finishes you should do, how to screen your tenants. So I think one of my most productive conversations before we actually purchased was with that property manager.So you start looking for your first deal. When does that happen and give us kind of the breakdown of the numbers. Did you pay the actual asking price or have to negotiate a little bit?Yeah, it took me a while to find that first deal. Actually, it was about 18 months from that initial conversations to me actually finding the deal. And in between there I started looking, didn’t really find anything that I was looking for. I ended up getting married or getting engaged, buying our primary residence. So I had some life things that went on, but it was about 18 months from me really deciding to actually find in that first deal. And it was on the MLS, it was a property that was listed. I was working with an agent, she sent it to me. I analyzed it that same day and I can’t remember exactly what it was listed for. I want to say it was listed from maybe one 50 or 1 30, 1 35, somewhere in there. But we ended up going under contract at a hundred thousand dollars. So we got a decent discount on that first deal, but it was nothing super creative. It was nothing super ninja. It would say, here’s a good deal that’s on the MLS. Lemme put an offer in. Let’s talk about you rash. How did you find your first deal?So my first deal was actually the second deal that I looked at. So it was pretty sudden, but I got into my head. I was working as a property manager. I got into my head, I wanted to do this. I was working for one investor, managing his portfolio, and his son was actually my first partner and he was going to be the money on the deal. And so the first property that I wanted to look at, I didn’t have a real estate agent. I had never bought a house before. And so I just called the listing agent who had the property for sale, found it on Zillow or one of those websites, and I called and she said, let’s set an appointment. And she said, just so you know, this property has flooded, it has foundation issues, and I just really didn’t know anything. And I was just like, oh, okay.
And I didn’t want to be like, oh no, I’m scared I going to cancel. This is how awful of a person I was. I got cold feet and I never actually called the agent to say that I was canceling and I was not showing up because I was so scared that I was just scared that I made this appointment and now I was already backing out. I wasn’t serious about buying a property. And so I hope I’ve made that agent money in another way someday. And I feel guilty about that of just ghosting the agent and not showing up. But I was like, okay, yeah, you know what? That scared me. That’s not the property for me. So then I was talking to my mom and my mom had a friend that was a real estate agent. So the next property I found was a duplex, and it was right in the town where I was managing other properties for this investor.
And so I went and looked at it with the agent and it was an old property, but there was people living in it. So I’m like, okay, at least people can inhabit it. And the second unit was vacant and needed some updating which cosmetic, which I’ve been kind of project managing any of the remodels that were happening at the apartment complex I was managing. So I was like, okay, I can take this on. And so we put in an offer, I think they had it listed at like 85,000. We went back and forth a little bit. We got it for I think like 74 9 or something like that. And we ended up getting it under contract pretty quickly. This was back in 2014. So there wasn’t a ton of competition with other investors in the area. I’m pretty sure we were the only offer, the only one interested in the property. So that ended up being our first deal. And we funded it with cash too. My partner’s money,I think you even showed growth, Ashley, between the first property that you walked and the second property that you walked, because the first one just hearing that it had some sort of issue and it spooked you from even going to walk the property. But the second one you said it was old, it was outdated, it needed some work, but you had already kind of talked yourself through it to say, well, hey, I’ve done things that are similar to this before. It just wasn’t my own property. So this is probably something that I can take. And I think for a lot of rookies that are listening, there’s a lesson in there because we all want to make sure that we’re growing. And I talk about this a lot on the podcast, and if you’ve listened for quite some time, you’ve heard me explain this theory, but we can’t grow.
We’re only doing things that we’re comfortable with, but we also don’t want to stretch ourselves so far that we’re getting into that zone of doing things that are dangerously outside of what we’re currently capable of doing. And for you, maybe that first deal, that’s what it was, it puts you into your danger zone where you’re like, oh man, flood foundation issues, that’s a little bit more than I’m willing to take on. But with that second property you walked, you’re like, I’ve done something very similar to this before. It’s just one step outside of maybe what I’ve done in the past. And I think as a Ricky, those are the kind of steps you want to be able to take that one small baby step outside of your comfort zone.I think that was said perfectly, and I was scared of that foundation issue and that the structural issues from the flooding and things like that. And it’s funny because recently I just had a property where I had tenants live in it for the last four years, and we decided it was time to sell that rental and move on to something else. And when we went into that rental after four years, it was literally like you went upstairs and you felt like you were drunk because the floors were so slanted, the property had just moved so much and the foundation was sinking in the front towards the front of the house. So all the floors, the tenant had left a can of cat food. And I remember taking the can of cat food, setting it on its side and just watching it roll down the bedroom as that’s supposed say, happened.
And so it forced me, because I already own this property, it forced me to have to figure it out. And honestly, it wasn’t that scary. It wasn’t that bad. I called a couple companies, told them the issue, we got someone to come out and give us a quote. And I would have to say the scariest part was that there was a lot of if then buts to this as to we have to, we are going to jack it up. We don’t know exactly what’s going to happen, how it will shift, how it’ll change. You might need to put a beam in here, all these things. And so it ended up costing $7,000 well worth it. We just listed the property and got it under contract to sell and thinking about it. Now, that used to be such a scary thing for me, but I also didn’t take the time to research to learn to talk to companies that actually do that type of work. And that’s why it was scary to me because that was not knowledgeable about that.I think a good exercise for virtually everyone that’s listening to this podcast is to practice that exercise of having conversations with problem properties. And what I mean by that is I would encourage everyone who’s listening to call on a property in a market you have no interest in actually investing in, right? So for me, I dunno, say you send me a property in Buffalo, New York, right? Yeah, right. So you send me a property in Buffalo, New York, but say it’s got foundation issue, say it’s got this, say it’s got that, use that property. It’s just like your practice mode. Use it as your batting cages to get your reps in and just talk to the agent and say, Hey, tell me about this property. I always got foundation issues. Hey Mr. And Mrs. Agent, do you know any companies that specialize in foundation repair and then call those foundation repair companies?
And I think when it’s a property we know we have no interest of actually investing in, it takes away a lot of that pressure of, well, I’ve got to make sure that I ask all the right questions. I’ve got to make sure that I get everything right. Because all you’re trying to do is practice. And yes, you’re going to waste a little bit of time for the agent, for the companies you call, but in the grand scheme of things, the benefit to you is so great that I think it’s worth it. So practice more as a real estate investor on deals that maybe aren’t super, super critical for you to get it. All right. The first timeWe have to take a quick ad break, but when we come back, we’re actually going to talk about the funding of the deals. And I mentioned cash, but it actually, it wasn’t any of my cash to actually purchase a property. So we’ll be right back. Okay. Welcome back from our short break. Tony and I are breaking down our first deals. Tony, how did you actually fund that first purchase?This was probably the thing that got me hooked on real estate investing was the way that I was able to finance this deal. I still think it’s one of the best deals that I’ve done honestly, but I found local bank that gave me a loan product where if I found a property where the purchase price and the rehab cost totaled no more than I believe it was 72.5% of the after repair values, a very specific number, they would fund 100% of both the purchase and the renovation. I’m going to say that again because it was a really cool thing that they gave me. But they basically said, Tony, if you find a property that’s worth a hundred thousand dollars, but you only have to spend $72,000 to buy it and rehab it, we’ll fund the whole thing. And that’s what I did. So my buy box was very tight as I was searching for properties because I had the guidelines of that bank as my frame of reference.
So every deal that I looked at, I would try and say, okay, what is it going to cost me to purchase? What is it going to cost me to rehab and the purchase price? I think for most Ricky’s, that’s easy to understand. I think the renovation cost is a lot harder for Ricky to try and estimate. So let me tell you guys what I did to figure that cost out. First, I got a couple of references for general contractors from my bank and for my agent, and there was one contractor that showed up on both of their lists. So he was kind of the guy that I was focusing most of my time and attention on. And I asked him two different things. The first thing I did was I asked him for recent renovations he had done like, Hey, can I just see some photos of some recent work you’ve done and give me the ballpark on what it costs that person for that specific job.
So I had one frame of reference there, and then I said, Hey, here’s a property that I’m thinking about buying. I don’t need a full bid. I just need you to give me a ballpark on what it would take to get this subject property to look like that rehab you just finished, just a ballpark number. And with that, I was able to give some price per square foot that I could kind of back into that allowed me as I was looking at deals, I could quickly kind of come up with a ballpark rehab estimate without having to ask that gc, Hey, can you go walk it? Hey, can you go walk it? Hey, can you go walk it? Because in your initial offering phase, that’s all you really need. You need a ballpark number. You’re going to be able to refine your rehab from an estimate to a true bid during your due diligence phase.
And it’s okay if you estimated $50,000 in rehab and it turns into 75 because then you just take that information back to the seller and say, Hey, Mr. And Mrs. Seller, I’m going to be candid with you. I had budgeted X for the rehab. It’s now actually Y, and the only way that we’re going to make this deal work is if you gave me some sort of credit or we reduced the purchase price, whatever it is. But that was my process, Ashley. I found a bank that funded the entire thing and literally it was $0 out of pocket for me. I think I had to pay for the appraisal and maybe a little bit of closing costs, but it was very, very minimal out of pocket cost for me on this deal.So that was very different than how I funded my first deal. I had the mindset because I didn’t know any better that you could not go to a bank that you had to pay cash for an investment property because that’s what the investor did that I worked for. I didn’t even know there was any kind of lending available out there. So I had to figure out how to fund that first deal because I didn’t have any cash at the time. And so the partner that I took on had some money saved and we decided to go in 50 50, but he would also hold the note on the property. So he would own 50% of the property, have the equity, get 50% of the cashflow, but also we basically had him as a mortgage holder. So we didn’t file an official mortgage note with the county or anything, but we did type up a loan agreement where the capital he put in was amortized over 15 years and five and a half percent, and he would receive monthly payments to pay back his principal, including earning that five and a half percent interest on his money at that time was a pretty good rate for also getting 50% of the deal on the property too.
So I think the biggest thing for me was that I had this person that was putting the trust into me because they didn’t know anything about real estate investing. I’d been a property manager, so I felt very confident about the management of the property and a little bit of the rehab just from being the project manager and the remodels for the apartment units too. So we put together that agreement. When it came time to purchase the property, he brought the check to close on the property and then he was getting his monthly payments. Unfortunately, there was some repairs that needed to be done that we did not account for. And that’s where I actually drained my, I think I had $5,000 in savings at that time, and I drained those savings to buy. We had planned, we had estimated to put in a split unit for the AC and the heat upstairs that it had an old wall furnace that we knew were going to take out.
What we didn’t know was that the panel, actually, the electric panel actually needed to be upgraded to actually add in the split unit. So we had to spend some of my savings for that. And then there was a couple other unexpected things that came up during that time that we ended up using my savings for. And then we just did the same thing with my partner where I got paid back a little bit at a time. I think it was a hundred dollars a month. And then when we sold another property, it was paid back the rest as we continued to grow our portfolio. But I think that was a great partnership for me in the beginning because this person, I was handling everything. I was finding the deal, whatever, and they were taking a risk with me doing my first deal. I was happy to give up that much stuff.
I was happy to putting in the sweat equity. I was happy that they were making five and a half percent on their capital knowing they were getting their money back and they were getting equity and some cashflow on this property. So right now, if someone brought me that deal, I would say, no, I’m giving away too much while still having to do all the work for the property. But it was such a great way for me to get started, and it would’ve been so much longer for me to actually get started. I think it was probably four years later after that first investment, maybe three that I actually found BiggerPockets. And in that year I tripled my portfolio. I learned about seller financing, who knew that you could actually do that, and I was able to seller finance a portfolio of properties from another lender. So I think I would’ve waited a lot longer to take action if I hadn’t have given this suite of a deal to that other investor.But I think you bring up a really good point, Ashley, that sometimes there’s this theory in startup culture like tech startups that when you are initially starting up your company, you should intentionally do things that do not scale. And there’s stories of CEOs like personally calling and hopping on calls with their first five or 10 or 30 or 100 customers to get that real qualitative feedback. And the idea is, well, you’re not going to be able to do that when you have a million customers. And the point is, that is the point that you can’t do that when you get to a million. So you should focus on those things when you’re at the beginning. And I think that same theory, that same principle can be applied to real estate investing where in the beginning, you should be doing things that don’t necessarily scale. You should be doing things at property, one that maybe don’t make sense when you’re at property 15 or 30 or 1000, whatever it may be.
And for you, Ashley, you said like, Hey, today where you’re at in your journey, that doesn’t make sense. But when you’re just starting out, that made a ton of sense. And I think that’s why it’s so important that rookies hear the stories of other rookie investors. Because if you only listen to Grant Cardone, if you only listen to Warren Buffett, you’re hearing the idea and the circumstance of people who have already gone through that journey. And sometimes it can skew the way that you should be making decisions about where you are at right now in your business. So sometimes you got to bend a little bit on what’s important to you in that early phase. I guess let’s talk about the rehab portion a little bit, right? We talked about how we found the deals, we talked about how we funded those deals, but the next part is the rehab. And I think it was a different experience for both of us. Ashley, because you were investing in your backyard. I was investing several thousand miles away, slightly different experience. So for you on the rehab side, Ashley, you had already, like you said, done managing the toward the portfolio you were managing. But was it any different? Were there any unique challenges managing that rehab when you were doing it for your own property?The property management on the side of project management for my own rental was very different than at working for the other investor with the apartment complex. Each unit was pretty standard as to what it was like. It also was built in, the apartment complex was built in 2002, so at this point it was only 12 years old, and the property I was buying was built in 1920. So very different as to what would happen if we opened a wall. And that was really one of my things as my first investment. I did not want to open a wall or take down a wall or rip out a bathtub and see what’s happening with the plumbing underneath the bathtub. So the property really needed cosmetic stuff as far as vinyl plank flooring, which we were starting to do in a lot of the apartments. So that was something easy.
I knew what the cost was, who to hire, kitchen cabinets. It was a very, very small kitchen. Lowe’s stock cabinets, I could pull my pricing as to what the cabinets would cost. Lowe’s designed it out for me as to what would fit where and what cabinets I would need. Also the countertop, it was just the form Mica countertops from Lowe’s how much I would need for that. One huge advantage of having a partner at its time was he had a roommate and he decreased the rent for his roommate if he did the repairs for us in the property. So his roommate actually did all the repairs for him for us and nights and weekends, and I didn’t have to pay anything. He just said, oh, I’m just not going to charge him rent this month to live in my house. And so he did all the work for us.
So that was another benefit of my partner. And I think all the time as you’re listening to this stuff, you think like, oh, well, I don’t have an investor mentor. I don’t have somebody with cash. I don’t have somebody that has a roommate to do work. There has to be some opportunities, some advantages that you have that Tony or I didn’t have. Tony had the advantage of his mom randomly living in this market for two years and him happening upon it and having somebody that lived there. So all around there is different opportunities, advantages. You may not realize what they are right now, but they will come about is even as you continue your journey, especially the more people that know exactly what you’re trying to do, you’ll start to realize, wow, this is an opportunity here. This is an advantage for me here.Ash, you make such an incredibly good point, and I’m so glad you brought that up and I could not agree with you more, but if you’re hearing Ash and you’re still like, Ashley, you just don’t get it. I literally don’t have anyone. I literally don’t have any resources. I strongly and firmly believe that the harder you work, the more opportunity you get. And if you put in the work of educating yourself, if you put in the work of networking with other investors, if you put in the work of just trying to do more deals, typically that’s where more opportunity comes. Had I not been listening to a bunch of podcasts and talking to different investors, I maybe would’ve never even connected the dots on Shreveport being the right place for me to invest, had actually not had the courage to walk away from her job in accounting and go work for an investor doing property management. She never would’ve saw the light at the end of the tunnel that she could do this herself. So the more activity, the more action you take, the better you get at spotting opportunities.And too, when I left my accounting job, I was ready to go be barefoot and pregnant on a farm. I did not leave my job to go into property management. It’s just like the offer happened. And I was like, well, I can work from home and part-time, sure, it will give me a little extra money. And so I think as life goes on, other opportunities will open. And I’m not saying go out and quit your job right now and wait for a real estate job to happen. But one big thing is what’s your skillset? Your job right now, how can that transfer to real estate? What will you be really good at? Do you do sales? That is a huge skillset to have as a real estate investor, to be able to go direct to seller, to negotiate the deals, things like that. So yeah, I think look at what skill sets you do currently have and use those for opportunities.
But also Tony, for him going out of state, that scared me. That scared me more. And so we were the complete opposite. He didn’t have the opportunity to invest in the hometown where he’s lived his whole life and he went to a different market. And that to me, that I saw as a disadvantage to Tony, that he had to go to a whole new market. He figured it out, and then he figured out his advantage. I know someone that lived here for two years, this is where I’m going to start. Instead of spending all this time analyzing markets all across the US not knowing which one to start, looking at those markets where you have those little subtle advantages of maybe you lived there for a little while, maybe someone else that lived there, maybe a great real estate agent in that market. Or if you literally know nobody and you’re going to end up like my one son who just wants to be an expert at Fortnite and you play video games and you don’t know anyone, then go into the BiggerPockets forums, network with people in the forums, set up keyword alerts for markets.
You’re looking in, create an Instagram account that is specific to real estate where you’re only following other real estate investors. See where they’re investing, what they’re doing. And then from there, pick a couple markets. Look at the people who have similar goals or reasons to invest as you do, and then maybe see if some of their markets align with what you’re trying to do. Just because I invest in Buffalo, New York doesn’t mean that it is a great investment, that it is the best return I could get with my money. It’s literally because it was the most convenient and it was the easiest for me at the time. That is literally the reason why invest here, because I felt like I had an advantage because I knew the market.I think the rehab experience for me, like you mentioned, was slightly different because I was doing it remotely and I was doing it while working a pretty demanding W2 job as well. And the way that I found success in managing it remotely was, I guess there were a few layers, actually. The first layer was the bank that I was using. They released all the funds to the contractor in draws. Before that draw was released, the bank would send someone an inspector of some sort to actually go validate that the work that the contractor said was done, was actually completed. So there was this layer of validation that I was getting at this bank that really wanted to protect the a hundred plus thousand dollars they just gave me. They were sending someone out there to validate the work was being done. So that was the first thing that gave me a lot of confidence to do this remotely.
And that’s not uncommon. I’ve talked to other investors who have worked with a lot of these local regional banks that have a really strong local presence where when they do lend on rehab and in construction, it isn’t uncommon for them to send someone out before that draw is made to validate the work is done. So there’s one thing. The second thing was I met with the contractor virtually every Friday I think it was. And we would FaceTime, he’d walk into the property, give me an update on here’s this, here’s that, here’s this, here’s that. And that just visually gave me what I needed as I was going through. And then as we neared the completion of the rehab, I’d already selected my property manager. They knew what was going on. They were doing some final walkthroughs with me to say, Hey, you should probably have them take a look at this to make sure that it’s ready to be rented. Hey, I noticed this. This might be an issue when we get a tenant in there to make sure they fix this. So having that kind of three legged beast of me doing my visual inspections, the bank sitting out their inspector, my PB, and that final set of eyes really gave me the confidence to do it. And honestly, that was probably the easiest rehab I’ve ever done. And it’s like, because I couldn’t go and drive over there, it just wasn’t even on my brain as much, and it was the easiest, easiest I’d ever done.Well, we have to take our last ad break, but when we get back, we’re going to find out what happened to those first deals and what’s going on with those properties today. We’ll be right back. Okay, we’re back from our short break, Tony. I guess first, before we get into what happened with those deals, let’s talk the final numbers. What were you cashflowing on that property after you did your rehab, you rented it out. What does the cashflow look like on your very first property?Yeah, if I recall correctly, after everything, CapEx, property management reserves, I was cashflowing about 150 bucks per month. Definitely not life-changing money, but it was a very good proof of concept on my first deal. And I think even more impressive because again, my out-of-pocket cost was virtually zero, so I got an almost infinite return on that first deal. So it was about 150 bucks per month on that first deal. What about you, Ashley? What did your first deal look like?Mine was honestly about the same After everything. It was so measly, and when I actually had ran all the numbers, I forgot to add snowplowing. So that ended up taking off, I dunno, 50 bucks off of my original estimate of what my cashflow would be to do snowplowing for the property. But yeah, it was definitely not life changing either. But one thing that I have learned is that first deal isn’t meant to make you rich. It was to start your journey and to propel you. And it did. It launched us. We got our second deal within three or four months of that when it was right down the street and we’re like, okay, this is perfect. It’s on the same street. We need to figure out a way to make this happen. And we did. And from there, it just started to slowly snowball. We found other ways to fund the deals, and that first deal was life-changing and not in cashflow, but the fact that it got us started. So yeah, same thing, a measly $150.But you make an incredibly important point, Ashley, that the purpose of the first deal is not to make you rich. Ashley and I have interviewed, we’re on what episode, 570 some odd now of this podcast. And out of those almost 600 episodes, exactly zero people have retired off of their first deal. No one’s done it. We have not met a single rookie investor who with just one deal they’ve been made. So the purpose of the first deal is exactly what Ashley said, laying that foundation, building that momentum. And you said, Ashley, it was within a couple of months after your first deal, you got your second. I actually didn’t find my second deal while I was under contract on my first. So it’s like it really does start to snowball once you’re in it.Somebody could retire off their first deal if they paid for a million dollar property that’s putting out 10 grand a month in cashflow. Okay, so I think that’s a really good to understand when you’re comparing apples to apples is we had $0 into these deals. They were full burrs. So when we were making $150 and we had no money into the deal. So I think that’s when you’re seeing all these flashy things on Instagram and social media of like, wow, they’re getting a thousand dollars cashflow. Well, maybe they put down 25% on the deal, so their mortgage payment is lower, they have more equity into the deal, all these different things. So really take that into consideration when you’re trying to compare apples to apples as to what’s actually going into the deal. And also time that you’re putting into a deal too. We could have said that maybe have a better return on it because our rehab only cost a thousand dollars, but that was because we did all the work ourselves, but it took us six months of our time. So take everything with a grain of salt. And if you really, really want to understand a deal, really take a deep dive into the numbers too. It’s like cash flow. Is that including what they’re saving for CapEx? Is that including their time to do the bookkeeping or is the other person paying a full-time bookkeeper? There’s all these different things. So it’s really hard to compare deals. Tony, let’s go over these deals now. So what has happened with your deal?My deal today is cash flowing exactly $0. We sold that deal, I want to say three years after we purchased it. As we made our transition from short-term to long-term, we kind of reassessed and said, okay, does it still make sense for us to hold these long-term assets? And I believe this was after I had lost my jobs, who were just looking for some additional ways to free up some capital to live off of, to keep investing into real estate. And that property, gosh, again, we bought it for 100. I want to say the rehab was about 50 grand, but it appraised for two 30. I think we ended up selling it for closer to 200, but we still made a decent amount of money when we sold that property. And that helped us during that transitionary phase of Tony’s unemployed. So we sold that deal. And actually again, I drove by it just a few days ago, and it looks like right now the current owner’s renovating it again. So yeah, it’s about to change hands again, it looks like.So my deal, I actually had to look it up on Zillow right now as to what it actually sold for because I couldn’t remember. So we did buy it for 74,900, and we ended up selling it in 2019. So we held it from 2014 and we sold it for 105,000. So made a little bit, we didn’t lose money on the deal. We pretty much had no other major expenses or any other rehabs happen, but we did have a tenant that we had to evict that we did put a judgment against them. I think it was for like $3,000 that hasn’t been paid and will expire in a couple of years, but really no major headaches with that property. Yeah, so we had some equity in it. I mean, by that time we had paid down, it was on a 15 year note. So over five years we had paid down that note to my partner.
So we had paid down a third of the property by that time. So we did have a bunch of equity. And yeah, it was a nice payday even at that time in 2019 when we sold that property, I didn’t really realize the value of holding properties, but that’s something I’ve really realized the last couple of years as to wow, maybe cashflow isn’t the greatest play. Like waiting until you get that perfect property that has great cashflow. What’s the property that’s going to cashflow little so you’re not putting any of your own money in, but also is going to have that appreciation play the mortgage paid on to build up that equity so that, okay, I need some money. I’m going to sell this property, and it’s doubled in value, or it has tons of equity in it that I have options. And I think that is one of the things I am most grateful for about buying properties 10 years ago, is that the amount of equity I have available in them, if I were to need those funds, and that could be a refinance, that could be a commercial line of credit, that could be just to sell them and take the money that could be to do 10 31 exchange into something bigger.
So if you have any hesitation, I would say down the road, investing in property, investing in real estate has been better than I could have imagined to give me the options I have available today. I started investing with the sole purpose of I’m never selling a property. I’m being a long-term buy and hold investor, and I’m holding these properties forever. I’ve bought and sold a ton. I have changed my portfolio so many times, and there’ll be properties that don’t serve you properties where what they’ll sell for just will outbeat what you’ll get in cashflow for the next five, 10 years. So I think really looking at other things than besides cashflow can really help you see the tremendous impact that real estate investing can have on your life.I think you hit the nail on the head, Ashley, that cashflow is just one piece of what it means to find success in real estate. And I think even when you look at real estate investors who are doing this at a very large scale, a lot of times their big paydays aren’t when the cashflow check comes in every month, it’s when there’s a capital event, when they sell a property that they’ve had for 10 years when they refinance a property, and now they’re getting some of that equity tax-free because loans aren’t income, it’s debt, and you’re getting these big refinances on these multimillion dollar properties. So the perspective real estate investing, I think shouldn’t be so singularly focused on cashflow because there are so many other levers that are important that help you build wealth over the long run. So I hope that for the Ricky that heard our stories today, although Ashley’s was in 2014, my first deal was in 2018, we get that the market has shifted, that things have changed, but the underlying idea behind those first deals is that the purpose of the deal is to lay that foundation and B, focus on the resources you have at your disposal to help you get that first deal.Thank you guys so much for joining us today on Real Estate Rookie. I’m Ashley. And he’s Tony. Let us know in the comments below what you’re doing to get your first deal, what market you’re investing in. We love seeing and following real estate rookies journeys. Thank you guys so much for joining us. We’ll see you guys next time.