In 2003 my wife and I had a bunch of things going on in our lives. We were graduating from College early, getting ready to get married and working on purchasing our first house. I had started my first job as a computer programmer prior to graduating from college so I had the income part of the equation for purchasing a house. We started looking for houses and the market was going crazy in the area. September 11th had happened a few years earlier and the DC area was flooded with funding to fight terrorism. This meant that finding housing was crazy and houses had doubled in prices in two years. We started making offers on townhouses that were going for $20-30K over the asking price. We were really worried that we might not be able to afford even an old townhouse. Eventually, we found a house that we were able to purchase for $220K which was $20k over the asking price. Lending was loose and the time and we were able to get a 5/1 ARM and planned on refinancing when our income caught up. We were barely able to pay the mortgage and household bills for the first several years. This was our first experience in the house purchasing world. It was not a fun experience and definitely did not make us think “man we need to purchase more of these”. Fast forward to 2008 and the markets crashed. We thought that this would be a good time to consider upgrading our house to a larger one and a house more appropriate for raising children. This took as a couple of years to find a house as the market started and continued to crash. During this time a couple of things happened: 1) we began reading books about how to become financially free 2) my wife’s cousin started a company flipping houses after reading Rich Dad Poor Dad. We started loaning money to their company at 12% interest. It was small at first $5-$10K. He pooled other families money and they were off and running. We continued to reinvest the interest and principal every time that we got paid back. Quickly we started to grow the amount that we were investing. Then they started doing something that seemed impossible to me, they started a program where you could get a house for close to $500. I told them that if this worked I would happily buy 10 of them.
They way that it worked, we would buy the property with investor’s money at a higher interest rate similar to the money that we had previously been lending and similar. When the property finished repairs we would refinance the entire loan including closing fees. This was going to be the fast train to wealth. Unfortunately, the gravy train of properties only made it 1 property deep as the lending laws changed and you could no longer finance 100% of the value of a property. This put quite the kibosh on the 10 quick properties. So we began to save up to purchase more properties and within a few years we had 6 properties.
We were having trouble getting the funds to purchase more properties and decided that we should look into doing something that would greatly increase our velocity of purchasing houses. After some time considering our options we began flipping houses. We went to a ton of seminars and started flipping houses in 2012. The first couple of properties made use very little money but we learned a ton. We started to make contacts that got us access to different properties and started to have some success. As part of this network of properties we found a commercial property that was a bank repossessed commercial property that they sold to us for the balance that was remaining on the previous loan.
Due to the network of people that we built in Houston we decided that we could take on properties in Houston remotely from DC. At one point in time we had 6 properties that we were in the process of flipping and then the floor fell right out from under us. The contractors that we were using in Houston began to disappear and one even knocked down one of our houses that we were going to flip and removed all of the foundation. One house kept getting robbed.
My wife had to move down to Houston for several months to get new contractor and redo all of the work that had been done. At the same time this was going on we had lent money to a partner for a flip in DC that ended up costing us all of the money we had. In total we lost $300K in cash that we did not have. To this day we still owe a big portion of this money. We ended up selling one property in Houston and 2 in Florida to help pay off the investors that we had on the property.
This channel is going to follow us as we work to find financial freedom. We are not starting from scratch but I want to share the experience. We could not have gotten where we are without many teachers and life lessons that I hope that you can learn from. I am hoping to pay it forward and help many others achieve their own financial freedoms using the techniques that I implement on this channel.
0 Comments