How We Became Landlords at 25

In November, some 3 (!) years in the making finally happened: we became landlords!

And fair warning, we’ve been working towards this for so long that I’m probably going to use a lot of exclamation marks, which I typically try to stay away from.

From the moment the hubs and I made the decision to retire by the time we’re 40, we knew that developing multiple streams of income would be essential to saving massive amounts of cash in a very short period of time.  The income streams we decided upon were in these categories:

• Online: blogs, online store, amazon
• Real Estate: rental properties
• Day job income: Matt & I’s jobs

Matt & I have obviously had jobs  this entire time, and you’re here so you can see that this blog earns an income.  (Also on my income reports, you can see income from selling on amazon and the online store).

The one income stream we hadn’t actually made a reality until now was income from rental property, but that doesn’t mean we weren’t thinking about it.

In fact, we started thinking about real estate income FIRST, 3 years ago before any of the other income streams became a reality.

We bought our first house at 22, while I was pregnant with out daughter.  This purchase was VERY well thought-out.  The house was in an area where it would rent well, close to St. Louis, priced just right and needed minimal renovations.

All told, we purchased our 1,600sq ft, 4 bedroom, 2 bath ranch on a corner lot for $46,204.  We brought $6,204 of that to closing, so we were left with a mortgage of exactly $40,000.  Then, in the first 3 weeks, we put an additional $10,000 of work into the house replacing the missing plumbing in the basement, bathrooms, painting, buying appliances, and rewiring as needed.  Also, my father-in-law put in a ton of work getting our house ready for us and the impending arrival of our daughter.

We bought it because it would be an excellent investment, but not somewhere we wanted to stay for more than a few years.  The schools weren’t great, and our family and friends weren’t close.

Then, in February of 2016, we blew out the kitchen, tearing down 3 wall to create an open-concept space with more cabinet space, granite counters, and island w/cooktop, double ovens, and more.

Think that cost a lot?

All told, we spend just under $3,000, and after putting in a new, stainless steel fridge, the total was brought up to $4,000.

We seriously owed the renovation to both our hard work and our friends and family’s hard work.  There were nights when we would get off work at 2:30, then go straight into working on the kitchen until 2 or 3 am.  It was a rough and very tiring few weeks, but the end result was SO worth it!

Here are some “before” pictures:

As I said, we took down 3 walls, which meant moving a lot of wiring, tearing up all types of flooring, and lots of drywall dust.

And yes, in the last picture there were 5 different types of flooring in the entryway.  But demo was the easiest thing.

Here’s the kitchen going in:

And finally, I shared a picture of the finished (cleaned) product on my IG:

I'm FINALLY getting around to taking pics of the new kitchen in the rental property. It was mine for only a few months and now it will be some lucky tenant's. Can you believe we did the whole kitchen for just $3,000??? Yep, countertops, cabinets, lighting, the double oven, the island + cook top and knocking down THREE walls!?!?

A photo posted by gretchen (@fitmomjourneythm) on Oct 27, 2016 at 6:41pm PDT

With the kitchen renovation done, the house was ready to rent, and after 3.5  years in a neighborhood we didn’t like, we were VERY ready to move, so in August we closed on our new house.  It’s a dream, and trust me, when we get all the boxes unpacked we’ll definitely be doing a home tour.

It took us a while to move, as well as have the hardwood floors refinished, paint everything again, and we even ended up renovating the master bathroom because of some serious plumbing issues.

But thankfully, that’s in the past, because the first week of November we found some (hopefully) great tenants who signed a lease and moved in!

What about the money?

I know you’re curious about the money, and so was I, so let me break it down for you!

We currently owe $53,000 on the rental (because of renovation costs) and we have 13 years left on a 15 year mortgage.

Monthly Rent: $1250
Mortgage: $423.50
Insurance: $153
Property Taxes: $100/mo
Security System: $55
Total: $518.50

We’re less than a month into being landlords, but already my father-in-law is looking for new houses for us to invest in!

That will definitely happen in due time, but for the moment I need a minute to rest, make it through the holidays, and put some money away in savings.  Moving and renovating is expensive, ya’ll!

We learned SO MUCH becoming landlords so young, but there are also a few things we regret:

Not starting earlier

Houses are REALLY tough to rent after school starts, because parents don’t want to uproot their kids unless they have to.  We actually had to drop the rent a little bit to get people in.  What stinks is that if we had hustled more (or had more money in savings to hire people to hustle more) we could have been out of the house sooner, and had renters in sooner too.

Being afraid to gamble

I’m weird about debt, even if it’s at a super low interest rate and we’re using it to build a business.  However, as our income streams diversify, I’ve become way more okay with using other people’s money to build my business.  I wish I had learned that sooner.

What We Learned

You have to start early.

Most people, especially while they’re young or in college aren’t thinking about rental property, but if that’s an eventual goal for you, you HAVE to start early.  We knew before we even started house shopping that our end game was to rent the house out after living in it for a few years.  With that in mind, we decided to make a smart buying decision.

Learn from the best

I can’t really take credit for making such a good buy, though.  We worked with my father-in-law and his realtor and used their knowledge of investment properties to buy our house.  We listened carefully to their advice, no matter how hard it was to hear.

You have to be uncomfortable

To get priority bidding and the best interest rates, we had to live in the house for at least a few years.  It wasn’t our favorite neighborhood, we weren’t close to family and friends, we didn’t like living in town, and we didn’t like living in the house while doing renovations.  It was tough, to be sure, but deciding to be uncomfortable for a few years is not totally worth it.

I wrote a post on What We Learned Becoming Landlords at 25 (link will be live on 11/28/16) where you can learn more about our journey, what we would do differently, and advice we would offer up if you’re thinking about becoming a landlord.

The most exciting part of this journey, though, is definitely seeing the income reflected in our monthly budget, and in our bank account.  Having that money coming in every month does wonders for my stress levels and helps the whole process to seem worth it!

Have you considered becoming a landlord?  What’s holding you back?

This post may contain affiliate links.  See my disclosures for more information.

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