Doesn’t that always seem to be the truth with all things in life? Whether it be your first home, kid, heartbreak, business, investment property…the list goes on and on. Why is that?
“The first step is always the hardest” (proverb) says that beginning a project is the hardest part; it gets easier once you have already started.
From my experience it is because you have to invent the wheel, work the kinks out as you go, try to stay motivated, and face a LOT of unknowns, all while not knowing if you will have to go it alone, or if you will have help along the way. It can feel like stepping off of a cliff and having faith that there is ground underneath that next step.
I feel like I talk a lot fear in my writing and day to day, but that is because there always will be those fears and doubts. I face them every single day! It is then up to me to decide if I take that next step anyway, sink or swim…
When I decided that we should move forward and purchase our first rental, I was BEYOND scared. First of all, I had to talk Jeremy into it. He was totally against it at first and didn’t want to have to deal with the possible headaches, expense and “aggravation” since we were already both busy with our careers already, an 8-year-old (my stepson Luke) and a 6-month-old (Jaxon) at that point in 2012. We already had my previous home rented out and that was enough for him.
At this point I was a realtor and considered an Independent Contractor, so basically my income was commission-only. For those that are not familiar with how that works, when we sell a house we get our portion of the commission, and no taxes are taken out. We get our check and then we are supposed to be smart and set aside some for taxes and live off of the rest. That sounds great, but that also means that you do not have the opportunity for a 401(k) or a typical retirement plan for when you get older and want to collect and not work quite so hard. Since I had no future retirement fund or actual goal, my goal was use equity in any investment properties to upsize and eventually sell them someday to put money into the bank, or build a new house or whatever.
For those of you who know me or my stories, you know that I don’t take NO for an answer and that I am not afraid to do some persuading. This was one of those times. I always tell people that if I had taken the first “no” from Jeremy, I would have never gotten into rentals, had my son Jefferson, gotten chickens or a pool, and the list goes on… so, I didn’t settle for a “no” this time either (it makes me laugh typing this because I tell him this all the time).
I told him my top reasons for why I thought we should buy it. The main ones were:
- I did not have a retirement plan and someday, when this was bought and paid for, whatever the value is, we could sell it for and get all of the money.
- If it was completely paid for, with a little work monthly, it would be straight monthly income to add to whatever else we had.
- There are a ton of tax advantages with owning real estate investments like depreciation and tax write-offs, just to name a couple, and I know that no one wants to pay more taxes than they have to (always consult with a tax professional to see yours).
- The icing on the cake for me, as scary as it was to think of going into debt and fearing I could not find a tenant, was that the price point was low and affordable if God forbid, I couldn’t find a tenant.
- I could ask for a seller’s assist to pay our closing costs if we bought it.
After a lot of persuading, he was in! He was scared to death, but he was on board. Between you and I, as you get into owning rentals and vacation rentals, the fear of buying the first one is much worse than any after, especially as you gain confidence in how it all works, and keeping them full with income flowing in.
We were able to reap all of the rewards of owning a traditional rental, from tax write offs, tenants paying down our mortgage while gaining equity, and appreciation as the value went up over time. So that $120,000 house would eventually be paid for it we kept it for the long haul with whatever rent we had coming in to be straight income, eventually. And then we could sell it and use that money for whatever we would choose to. That isn’t what we ended doing and for those that have read my book Vacation Rentals: The Ultimate Guide, you know part of this story and have figured out that I am talking about our Central Avenue home, which was featured in my book, both Chapters 9 & Chapter 11.
I highlight this part of the story in hopes that My Resources allow you to ease MOST of those fears when it comes to investing in real estate and vacation rentals. Whether it be my VRA course, my book or coaching, let me ease your mind and show you that the ground is there, when you take that next first step!!!
This story doesn’t end here. This definitely is a “To Be Continued…” stayed tuned for the rest of the story and pictures, from house fire to public humiliation and then ultimately being able to reflect on the big picture and see why things worked out the way they did and why we have transitioned most into vacation rentals or sold our traditional rentals. It has all offered so much equity, experience and abundance for our family and we are so grateful that we took that first step. And ***side note, Jeremy is a LOT easier to convince now!
Here is our first rental, 65 Central Ave, Wellsboro. Please stay tuned for the “rest of the story”. And make sure you sign up below to connect and be in the “know”.
Chris
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