My Journey into a Million Dollars of Rental Home Debt

Part 1 of Series

Here I was, 13 – 14 years into a good job, making good money and I realized I had a passion for real estate. Afterall, I had moved several times with my company, bought a few houses and read / studied quite a bit about rental homes.  So why not become a landlord?

At the time, most of the books on real estate (even today) talk about leveraging other people’s money (OPP). Put as little down as you can and use the bank’s money to grow your investments.  After much investigating, it made sense. My 5k to their 70k and I make money on the full 75k. Sign me up!

I was smart (so I thought). I drove many neighborhoods and finally picked the perfect place. Homes were a little older but good deals and a quiet, safe environment. By leveraging money I had in my stock plans, I was able to pick up 9 houses in this neighborhood in 4 years. BAMM! I was set for my future.

If only I would have stopped. Real Estate was going up, I convinced myself I needed more. If mistake#1 was borrowing money from a bank, then mistake #2 was venturing to new areas of the state (and out of state). I picked up 5 more properties outside of my “sweet spot”.  At the height of my stupidness I owned 3 out of state properties, my personal residence and 14 in my state. Debt out my eyeballs.

You see, contrary to what people think, rentals cost a lot more to maintain than you think. What little profit you might make goes toward other vacant homes or repairs. The more was not better. It actually made it worse as now I was always fighting repairs or vacancy.  Money was sinking fast. But darn I was having fun and being stupid and it was costing me.

I woke up with way over a million dollars in debt on homes I was losing money on and the market was about to tank. Hold on everyone, the ride was just beginning…..

 

T