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Mortgage Planning for Real People


When I graduated from college, and was hired to work in Chicago, I knew that I would be low on cash and that I didn't want to throw my money away on rent. It was at that time that I decided that I would buy a condo in the city.

For the next 8 months, I lived out of a backpack and slept on the floors of 12 different friends around the city, moving about every 2 weeks. With no money in my bank account, I got online and googled "no down payment loan". I clicked on the first link and decided that that would be my lender. Two months later, I was sitting at a closing table. My lender had left the country, my closing docs/numbers were nothing like what I was told they'd be, and my attorney let me know that I could either pay the extra $10,000 in back-end points and increased monthly payments, or I could walk away from the table and likely lose [my] home.

I bought the house. I never heard from my lender again and I didn't care to speak with her. Sometimes it's better to learn from your mistakes and let God "fix" those who wrong you.

For the next 12 months I lived on ramen noodles and corn dogs, but when that first year was up, and I was able to refinance, I got into a great loan at a fantastic rate, and started to look at other properties to invest in. Less than a year later, I located a great property on my street and put in an offer. I saved on my rate by making the new property my primary residence, and I rented out the one that I had purchased first. During that first year, and even the second, I earned upwards of 15% appreciation in each of those properties. I still have the same renter in that first property that I've had since the day I moved out. He's gone from bachelor, to engaged, and will be getting married next month and becoming a father in December. I cannot emphasize enough, the importance, and even privilege, of having good renters.

Though I only own 2 properties, I have 3 renters because I rent the spare bedrooms in my 3bedroom/2bath condo to people who find me on craigslist, and I've always had excellent experiences. Owning multiple properties has insured that I've always received money back from Uncle Sam come tax time and I expect that it will insure that I don't have to receive money from the government come retirement time. The way I see it, if anyone can buy at least 2 properties while they are in their 20's, live in one and rent the other, and pay them off, even at a 30yr pace, they will insure that by the time they're 60 they'll have 1 income property free and clear, and no payments on their own house. That's a solid retirement that always grows with inflation and the cost of living. If you can buy 3-6, then that's just more income for your future.

When I found REI I loved that it allowed me to share my experiences and lessons learned while having the honor of hearing from some of the most experienced and knowledgeable people in the industry. I've made friends with people who've suffered some of the same difficulties I have and have been encouraged by their stories. The rental agreements kept on the "tools" page have been an excellent asset and I've even been able to impress some friends by pulling together a purchase contract in a matter of minutes (also found on the REI "tools" page).

Clearly, not all of my real estate experiences have been good, but I've learned so much through my troubles, triumphs, and resources like REI, that I wouldn't trade my time or money for any other investment.