My First Investment Property, a $25,000 Gold Mine
- May 16, 2016
- 4 min read
I am very proud to tell you that when I was 18 I bought my first investment property. It was purchased in 2010 in a tiny-tiny town in Saskatchewan, about four hours east of Saskatoon. My brother and I own it together and it cost a very small sum of $25,000!
How is this possible you say? That can be put on a credit card!
Yes it's true, and guess what? There are still properties out there around this price! My boyfriend Scott and I purchased a property for $26,000 this past April, the closing date is in July and I will be sharing the purchase and renovation experience on an upcoming blog post! :)
The decision to purchase this first property was one of the best I've ever made.
At the time of purchase we received $800 each month in rental income. Since we paid cash for the property and all utilities were in the tenants name, we had minimal expenses for the property each month. For the first two years we had an awesome tenant living there. We rarely had to deal with this property because our tenant was very handy and whenever a problem came up, he would fix it himself and we would take a few bucks off the rent, it was the ideal situation. Especially for new, young landlords. This Real Estate stuff is too easy!!
Shortly after he moved out the so called "nightmare tenants" moved in.
Really, it's not that bad. It's definitely a learning experience and extremely frustrating at the time, but I hate to see people who give up on investing because of a bad tenant experience. It'll probably happen to the best of us, especially just starting out and learning the ropes. We had two bad ones back to back (maybe we didn't learn our lesson the first time.)
The first one would call me constantly about little problems with the house and of course I get it and I'll do my best to fix them but this was never ending. Eventually she moved out and the second couple who moved in after that were a lot worse.
Every month there was some kind of excuse and they would never pay the rent on time or not at all. I waited for months for the damage deposit (which never came). All in all I was too nieve and trusting with these people. Lesson learnt, be CAREFUL with who you choose to live in your home. This sounds obvious and simple but we were learning and never had problems before, why wouldn't someone pay their rent?! Somehow, we weren't expecting it.
We definitely learned to be more pro-active in identifying things that need to be done before the tenants move in. This is now a key part of our process, which in hindsight should have been key from the very start. But, "you live and you learn" i guess.
During the month of March 2016, after these tenants moved out, my AMAZING boyfriend Scott and I drove four hours each way to to give this house a complete renovation. We work full time so it had to be done on the weekends. (Seriously isn't he the best?)
The first weekend was just a total demo weekend and figured out a plan for the renovations. A few disagreements took place, but all in all we make a pretty kick-butt team.
Throughout the weeks we picked up supplies that were needed for the reno. Friday afternoon we would take off and pray we wouldn't get stuck in a snow storm....
Of course, living in Saskatchewan, it happened anyway. It was the Easter long weekend so we took an extra day off planning to really get into the renovation when, you guessed it, we drove straight into a BLIZZARD!!! I'm talking total white out, fully loaded van, at least a dozen trucks in the ditch...so much for the early getaway.
7 hours later we finally arrive, unload the van at 11 PM so our paint didn't freeze and try get to sleep. I have neglected to mention that the van just happened to be our hotel room, which is a brave move in the tail end of a Saskatchewan winter!!
Sure enough, the first weekend we were under prepared and brought a heater with us that didn't work....
We froze a little but what kinda Canadian hasn't
experienced some winter camping. It was a bit of an eye opener for Scott the Australian mind you!!
This is how we lived for the 5 weekends we needed to get it done. We poured about 400 hours and $7000, including materials, gas, food and of course a few beers, into the project.
We now have amazing tenants living in there who signed a year lease at $900 a month. This is a Total Return on Investment of 463.38% - This is the sum of cash flow, passive appreciation and active appreciation after one full year of operating the property.
This is our first and favourite "little investment on the prairie" and we seriously can't wait to continue to invest in these types of properties.
BEFORE PICTURES
AFTER PICTURES
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