How One Pharmacist Couple is Heading Toward Financial Freedom
The following post is written by a pharmacist and investor from North Carolina. He asked to be identified only as a “PharmD working on Financial Freedom”. He and his wife started investing in real estate just one year ago and now own two properties in the Carolinas. Together, these properties put nearly $600 in their pockets each month!
Taking the First Step.
We were finally ready……or were we? My wife and I decided to take the plunge into real estate investing last April and I can honestly say that we have not looked back. I had completed substantial research during the previous year and a half prior to our purchase through networking, various websites (Bigger Pockets is one I recommend in particular), and our local Real Estate Investing Alliance (REIA) groups. We both dove in headfirst since we knew we were ready! Once we closed on our first investment property and really started the process we were both hooked. This particular investment was mostly “turn-key”, requiring some slight upkeep to get it rent ready, and we were both excited because, from my research and knowledge of the market, I knew it was undervalued for the area. (Later we found out that this property was undervalued because it was owned by out-of-state investors that wanted to off-load some of their investments) Fast forward almost a year and my wife and I still have the real estate investing “bug”. We are at the tail end of a renovation after closing on a second property closer to our primary residence in February and are even more excited about this one!
Here are the details on the properties we have purchased. Both are single-family homes and were purchased using conventional mortgages.
Property #1:
Purchase Price: $172,500
Down Payment: 20% down ($34,500)
Loan Amount: $138,000 amortized over 30 years with 5.375% rate
P&I plus taxes: $1022
Rental income: $1495
5% each for Vacancy, Cap Ex, repairs: $224
Monthly Cashflow (self-managing): $228
Property #2:
Purchase Price: $140,000
Down Payment: 20% down ($28,000)
Loan Amount: $112,000
P&I plus taxes: $796.97
Repair Cost: $12,000
Rental Income: $1,400
5% for Vacancy, 6% for Cap Ex, 6% for repairs: $238
Monthly Cashflow:(self-managing): $365.01
As you can see our cash flow improved greatly from our first property to our second. We learned A LOT from our first investment and were able to apply that knowledge when making the decision on #2.
Allow me to rewind and elaborate on how we got here. There are two key reasons that allowed us to move forward and dive straight into the exciting yet scary world that is real estate investing. The first was that my wife (and the absolute love of my life) was 100% committed with real estate investing as a wealth building tool. It definitely took some undertaking to get to this point, but once I convinced her to attend her first REIA meeting, I knew there was a chance she could get on board. During the meeting, she was able to discuss the power of real estate as a potential moneymaker with real investors who were successful in this space. After the meeting, she was officially hooked! I knew that there was no way we would be successful in real estate unless she was dedicated to the process. Having a partner that could give her thoughts, feelings, and expertise (which seem to be always 100% correct) on a potential deal was absolutely essential.
The second reason that convinced us we could move forward was that even after obtaining financing and putting 20% down, we still had significant reserves in place and could purchase our investment in a position of financial strength. Through my research, I had read and seen horror stories of investors not anticipating capital expenditures (roof repair, HVAC repair, etc.) or routine maintenance on their investment. Overlooking these unexpected costs and not having the funds to cover them ultimately caused them to spiral into further debt. I cannot emphasize enough the importance of this as we ourselves had multiple issues that arose (HVAC, water heater leak, garbage disposal, broken refrigerator, etc.) which could have crippled us had we not bought the investment in a position of financial strength.
We cannot wait to see where the journey takes us but know that real estate, along with traditional investing, will greatly accelerate our path to financial independence!