Back in 1999 I was 22 years old, living alone, with no family, and no assets. I never went to college and was working as a bartender. I was addicted to Heroin. I had inherited some money when my mother died, but only had $40,000 left. I knew that I was close to losing it all.
I've always loved old houses and looked into buying a house. Everyone laughed at me. I had virtually no credit, no credit cards or even school loans, no job history and had only had a bank account for a year. I thought that my $40k would buy me some clout, but I live in the San Francisco Bay Area, where the cheapest house is $400k.
Everyone told me that the ‘tricks' you learn in real estate books wouldn't work here. That sellers had too many buyers to have to agree to any terms. I had no other options and didn't give up hope. I found a listing in the paper that said OWC. When I arrived at the property, it was a real nightmare.
There were 20 tenants living there without paying rent (and this is a heavily rent-controlled area where you cannot just ask them to leave….), rats, mice, roaches galore and the property was in shambles. The filthiest mess I'd ever seen. The owner was an older woman who lives out of town, was being terrorized by her renters and didn't even have a key to her own building. She was willing to sell this huge duplex for $260k with 11% down. She financed the rest at a great rate. Despite my youth and lack of credit, the property had been on the market for a year with no bidders. She was ready to throw it at me!
After determining that the stucture was sound, my partner & I made an offer. As soon as those tenants learned that the new owners were young and full of energy – folks who couldn't be pushed around, they moved out on their own. We gave them one month's rent to help them move.
We gutted the entire building. We re-did the electrical, plumbing, and every last interior detail all by ourselves. We didn't have money for contractors. I started getting credit offers left and right. I made connections in all aspects of the field. Once I had something to care about, something to throw myself into, I got clean from drugs. After all – who had time for that!!
We rented out the units. It turns out that we bought 6 months before the Tech Boom of the Bay Area in 2000. The building was worth $650k before we could blink. We made $400k on it in 4 years not even including the $50k rental income we get yearly. This was thrilling for me – I had lived on the streets for years as a teenager, and now I had a place that I could always call home.
I used my new found equity to refinance that loan and take out enough cash to buy another fixer. This put me in the position to build some real credit. The owner-financed loan I'd had before was great for getting my foot in the door, but lenders wanted me to have a real bank loan that went on my credit report. That refinace got that for me and led us to our second property.
We did the same thing again. This time we made $200k in a year on that house. We sold it this past June and are working on our third property. It's been 5 years since that first day. I am 27 years old, drug free and worth over 1/2 million dollars. I am way ahead of the game. You may laugh at this, but I don't care. My whole story started with a late night TV commercial. Everyone said that it couldn't be done in the SF Bay Area. Well, I did it. If it can be done here, it can be done anywhere – and look who's laughing now!!!
Of course, this is oversimplified. It was a lot of hard work. At times I had to borrow against my car when costs ran over. But hey – at least I have a car these days. And a house, and another………..Keep up the hard work. It takes unconventional people like us, people who don't give up, to do what we do. Luckily, there aren't too many of us around………Good luck everyone!!