Jumping Into The Unknown World Of Real Estate Investing With Ryan
Ryan and his wife had very little knowledge and no experience in real estate investing. But when the right opportunity came up, he knew that was his opportunity to grow his knowledge, while saving on housing costs. He tells us he was able to begin learning these lessons by purchasing a foreclosure property for a mere $5,000 down payment.
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Notable Mentions – list out any relevant links, books, websites, or anything that I saw “I will drop a link in the show notes” that come up in the conversation.
The Tools of Titan – Tim Ferriss
Ryan’s First Swing At Real Estate Investing
While Ryan had experience working with real estate investors, he had never taken on the project as the primary or sole investor. For his first project, he and his wife took on a foreclosure in their hometown. (Another episode of our podcast, with Joseph, talks about his experience with a foreclosure investment too!)
They made the purchase in December 2016 for $165,000 through FHA financing. In this case, the home wasn’t in bad shape as it had been vacant for a few years, and the bank made sure it was in decent condition.
But as in any relationship, each partner had their own wants. Ryan wanted to make it a multi-family unit with the idea of house hacking. She had no interest in it as she didn’t want to be under the same room as someone else.
The Beginning Of A Live-In Flip
The property was livable, but needed some cosmetic work to make it up to date. So once the purchase was complete, Ryan and his wife did their walk through of what they wanted to renovate. The kitchen, cabinets, bathroom, and paint the entire home were on their to-do list. They decided to start with the hardest tasks first and work their way down the list.
As they managed through the project, Ryan took on the contractor type responsibilities while his wife was more of the designer and decorator.
Looking back on the project, Ryan would have changed a bit of the outside and added a fence in. But the numbers didn’t add up, so he decided to forego those exterior options.
However, he credits much of the success of the project to family members that are tradesmen and lended a helping hand during the renovation. It helped boost his confidence to know that they could accomplish and finish the project.
The entire project ended up taking about 2 years as they were slowly working on the project full time. After that 2 year timespan, they sold the home.
The Results Of A Live-In Flip
The home was listed for a mere 4 days at $215,000 before an offer was taken and the home was under contract. Since Ryan had his real estate license prior to listing the home, he was able to list it himself to save on realtor costs.
The renovations and down payment resulted in a net investment of $18-19k. And they walked away with a net profit of $31,000, but ended up receiving a check for $50,000 including the savings from self-listing.
They took that profit to pay off wedding debt, and then rolled the remaining amount over to their current property – a second house hacking project.
A Second Live-In Flip, With A Twist
Because the first house hacking project went so well, they decided to dip their toes in once more. But shortly after they moved in, they found out they were pregnant with their first child.
They purchased this next property for $140,000. Because Ryan knew it was a good price, he made an offer for full price right after they walked around it. The plan for now is to stay in that home for two years to avoid any taxes, and then take the profits to roll over into more permanent housing for their family.
The Famous Six
What is your favorite personal finance resource (blog/book/podcast/etc)?
Set For Life – Scott Trench
Thinking In Bets – Annie Duke
What’s your favorite real estate related resource you’ve read recently?
What is your favorite travel destination so far?
Where will you travel next?
What is the biggest bucket list goal that you haven’t accomplished yet?
Buying a home on the street I grew up on.
What is your favorite life hack?
Philosophy, specifically stoicism.
Be sure to check out our Ultimate Guide to House Hacking for a great overview of the different styles of house hacking and different types of tenant bases.
Check out the home page for “The House Hacking Podcast” here.