After our second child arrived in 2001, our New York City apartment felt smaller and smaller.
We always had a strong interest in buying real estate, but never pulled the trigger. A big regret was not buying a top floor duplex apartment in a small building in the Kips Bay section of Manhattan in the mid 90’s. In our defense, we were less than 2 years out of college and it would have been a financial stretch to do so.
But before long, that several-hundred-thousand-dollar apartment would be worth more than a million. What an investment that would have been!
Driving Force Behind Our First Real Estate Purchase
After our 2nd child arrived, we needed more space than our modest Manhattan apartment could provide, but we were not ready to give up the conveniences of New York City. Our work commutes were only 30 minutes, the school and activities for our older child were all within walking distance, and we had other family close by for emergency babysitting. But with the family growing, not only in persons, but also in possessions, it was time for our first foray into real estate.
After several months of looking, we settled on a 4-bed, 2-bath Cape Cod style home in Little Silver, NJ.
Why the House in Little Silver?
It was a small starter house in a nice town, but served our needs because it was much larger than our New York City apartment, and the size was fine for us because we would only be there part time.
The house was priced for a quick sale, so it was a good deal for us financially. Aiding us was that we had a really great broker who thought of us right away when the listing came on the market, ensured we saw it quickly and could put in an offer before someone else could grab it. Even though the seller was only in the home less than two years, they likely came out whole in the end, even with the improvements they had made, because appreciation was high at that time and the home was sold to us for 30% above what they paid.
It was close to the train, which was also perfect for us because we’d be able to commute on the weekends, since in those days we did not have a car. It was a place we could go on the weekends, but also close enough to New York City that we could turn it into a full-time residence if we decided down the line to leave city life for the suburbs, or if the city was no longer affordable for us.
That First Real Estate Purchase Enabled Others
By the time we closed on that house, it was early 2002. Fast forward 15 years, and we still have not left New York City, but the Little Silver house allowed us to make our first rental investment in 2005 in Asheville (North Carolina), because we were able to get a $150,000 home equity line of credit.
This financial flexibility allowed us to keep going. In the intervening years, we made 13 more real estate purchases, including more in Asheville, as well as others in Jacksonville (Florida), Indianapolis (Indiana), and Bronx (New York), for a total of 15 properties in 15 years. Over time, we have sold three, so we are net 12 properties, one of which is our primary residence in the Bronx.
Scouting for more real estate is a big driver of our travels – we’re now looking into buying real estate internationally, making the trips even more fun!
What We’ve Learned About Purchasing Real Estate
We have learned many things along the way. When you add up the experience of 15 years, purchasing 15 properties and working in 4 geographies (while passing in several other cities including Philadelphia, Birmingham, Kansas City and others), we could write a book, but we’ll start with a series of blog posts to be published in the next few weeks outlining the key things we figured out along the way:
- Helpful connections to buying real estate don’t have to be in real estate
- In the “is buying real estate for cash flow or for appreciation?” debate, the best answer is Yes
- Turnkey works for buying real estate but it is not 100% turnkey
- Run the right numbers before you sell
- You will make mistakes so risk management is critical
Each property carries lessons in the discovery, buy and sell. Even just holding the portfolio provides an ongoing education. I’m sure the next 15 years will be quite informative!
Thinking about buying a second home and have questions? Leave us a comment below, or better yet, send us a note at firstname.lastname@example.org.