A switch flipped inside of me after college. I became obsessed with being successful and getting rich. I devoured self-help books like popcorn shrimp. How to Win Friends, 7 Habits, Think and Grow Rich, Richest Man in Babylon, Rich Dad Poor Dad, etc. etc. They worked me up into a frenzy. I wrote down goals. Worked like a maniac. Attended seminars like some Amway salesman from a prior generation. It was those real estate seminars were resonating with me. That’s where I’d strike it big. Real estate. Passive income. Just like Rich Dad.
Kelly and I started dating around this time. A year or two in, things were getting serious. At Pepe’s Pub in Manchester, CT one night, I said, “It’s pretty obvious we’re going to get married and have babies someday, right?” She laughed nervously. Maybe I threw that out there a little early.
By 2006, Kelly was coming around to the idea of sticking with me. She didn’t so much “move in” as she just stopped going home one day. Combine our budding relationship with my burning desire to buy houses and get rich in real estate, and then mix in the greatest real estate boom in human history, and voila, you get the story of our first home purchase. A story that started 12 years ago, and ended today.
First I got pre-approved for a mortgage. The mortgage broker said, “We’re going to do what’s called a ‘stated loan for you’. Here’s how it works. You’re going to state your income to me, and I’m not going to check it.” So I told him $100,000/year. Good thing he didn’t check.
Next, I looked at about 5 or 10 three-family houses. They were all the same. Dumps. Dirty. In disrepair. Guard dogs trying to scare me away. So when I saw our future house in Manchester, it looked like the Taj Mahal by comparison.
We bought the house for about $275,000. We only had to come up with about $10k for the closing, which was exactly how much money Kelly had in her bank account, saved up from tips waiting tables (that’s right, Kelly bank-rolled me in the early days). The guy who sold us the bought it for $150,000 just 5 years earlier. This was going to be easy money! Rich I tell ya!
After the closing we went to Max’s Oyster House, a fancy restaurant in Hartford, and got champagne to celebrate. That’s what rich people do, you see.
The house was built in 1906 as a side-by side duplex. In the 70s, someone lifted the house and added a first floor, so that it would have 3 apartments. We were going to live in the smallest and most challenging to rent, so we could maximize our income. The apartment we picked was crooked. What do I mean crooked? It’s not a metaphor. I mean if you put a golf ball on the kitchen floor, it would roll to the wall on the other side of the room. We had to prop the kitchen table up by about 2 inches on one side to keep our dishes on the table. We didn’t care.
The guy on the first floor was a crack head. He was a nice enough guy, but he smoked crack in and around the house all the time. He also was the guy who put the new roof on the house, which he did in exchange for free rent (found that little gem out after the sale closed). I explained to him that I was going to fix up his unit, and what I needed to charge for rent to pay for my new mortgage. He decided moved out, which was probably a good thing for us.
The guy in the other apartment kept to himself. Then one day the US Marshalls came banging on our door. “We have a warrant for a Mr. So and So”, they said. Oh, wrong apartment, he’s on the other side of the house. We never saw that guy again. You can’t make this stuff up.
As we turned over the tenants, Kelly and I would fix up the apartments. We did a lot of the work on our own. Here are our combined prior construction accomplishments: changed light bulbs, swept floors… that’s it. We decided to try to tile, lay flooring, paint, change light fixtures, replaced toilets, etc. etc, all on our own. The results were stunning. Beautiful. We got new tenants and started collecting rent. We were in business.
Buying that house was pretty easy, so we bought another three-family house, and then we bought a single family house, all with no money down (i.e. free houses y’all!). We bought that last one just before the housing market crashed.
The recession was pretty rough on us. At one point, each house had about $100,000 in negative equity, maybe more. One of our mortgages was at a really high interest rate, and it took us about 5 years to refinance it, which caused a real financial strain at some points. But we never missed a single mortgage payment.
Over the years, we evicted tenants, got scammed, replaced roofs, dealt with constant conflicts and repairs, murdered hordes of roaches, personally cleaned unspeakable filth, gone through a dozen lousy contractors, and had some very very lean months. The stress and costs just went up when we moved away from Connecticut. We’ve been trying to be good remote landlords for almost 5 years now. And we did learn how to be competent landlords over time.
Today we sold our very first house, that three-family crack house back in Manchester that we once lived in. I sold it for $222,000, and I had to put about $10k into it in repairs to get the deal done. All told, I probably lost about $150,000 on that one single “investment”, maybe much more, I don’t know. I don’t really care. That one risk didn’t pay off. I learned a lot and there was value in those lessons. And enough of other risks we’ve taken over time have paid off. I mean, I no longer live in a crack house after all, and that’s something.
I’m also happy to be rid of that burden. I’m trying to simplify my life, and cut out unnecessary stress or uncertainty. This is a win on that front. I still have that other three-family house and that other single family house back in Connecticut. I don’t know what I’ll do with those just yet.
On my way home tonight I’m going to pick up a bottle of champagne, so we can celebrate. Celebrate less stress. Celebrate our first house together, the house we got engaged in. Celebrate being risk takers and being willing to learn and grow. Celebrate another chapter in our amazing life together. That’s what rich people do, you see.