Saving to Invest in Real Estate Was A Priority
When we first married, both of us expected to be homeowners someday. To make that happen we knew we would have to save enough to invest in real estate, as soon as possible. Fortunately, we were born at the right time, had supportive families, and had learned the importance of living frugally from our parents.
From the Beginning of Our Marriage We Were Careful with Money
We got married in June, 1964. I had just graduated from UCLA and my husband needed to finish summer school before he would graduate. He worked half-time while he went to school. We had to pay half my husband’s small earnings of $200 a month in 1964 for rent. We had no car. We didn’t go out to eat. We didn’t pay for entertainment and outings. During that first year we saved $300. We lived as frugally as we could and we had some lucky breaks. (That’s another way of saying God was good to us.)
We Began to Buy Property
Our First Home, © B. Radisavljevic.
Left to right: Dad, Me, Cousin Edna, Mom, and Hubby, 1967
Four years after we got married we had saved enough to buy our first home. Our family helped. We had saved almost enough for a down payment, but needed to take a second mortgage to make it happen. My father’s mother’s first cousin, (middle in photo above) decided to contribute the money to the cause so we would not have that extra debt. By that time I had been teaching for a few years and my husband had a better paying job, but still not full time because he was still in graduate school. By that time we did have a car because my husband needed it to get to his new job. We lived in that house for nine years before he got another job and we had to move again.
Our first house had increased a lot in value. The new one was in a less expensive area because it wasn’t very developed in Newbury Park yet. We were able to buy a five-bedroom, two-bath home for $20,000 less than we had sold our old two-bedroom, one-bath home for in Culver City. You can see the difference between our first house in Culver City (black and white above) and the new one in Newbury Park (very top photo).
With that profit we bought our first condo to rent out. We still lived frugally, avoiding luxuries. Also, we had no children yet. We adopted two older children while living in that house, but had still saved enough to buy two more condos a friend was selling. Finally we exchanged the three condos for one commercial building in Ventura. It had two downstairs store units and a dental lab on top. Behind was a duplex with two units to rent as apartments.
Our Two-Story Commercial Building on Main Street in Ventura, © B. Radisavljevic
Expanding Our Investment
When we moved here, we kept our old home to rent out. We fixed up a mobile home on our property the previous owners had first lived in while building the real house, and then they used it for storage. We changed it back into a living unit rental to help pay our mortgage for this house. When my husband’s parents in Carmel Valley died, he inherited their house and we rent it out. So even though we have this property, it was our way of funding our retirement. Even so, I doubt if we will ever be able to afford to retire. We still live very simply and hardly ever go out to eat unless we are out of town. We don’t buy each other presents, either, and that saves money.
When we had children, we did buy them presents and we traveled more and we did things with them, and that did increase our cost of living during the nine years they were with us. My mother generously paid for my son’s burial, though, when we did not have the money. We had a vacancy then for which we weren’t getting rent, and things were tight. Mom didn’t want us to have to borrow or worry when we were already overcome with grief.
Are All Landlords Rich Fat Cats Who Exploit Tenants?
Fat Cat, © B. Radisavljevic
I think a lot of renters picture landlords as fat cats who just love raising rents on people. We have carried tenants who were in terrible circumstances – people we should have evicted because they could not pay the full rent due. A previous renter in the Carmel Valley house had not been able to pay her full rent for a few months. She finally found a new place to live, but it still took her weeks to completely vacate and get all her stuff out of the house. She still left a motor home parked there that wasn’t running right. We let this happen because she was caring for an elderly mom, who finally had to move to assisted living. On top of that, the tenant herself became terribly ill, was hospitalized, and was too sick to move out. When she was back on her feet, she was finally able to move the motor home and most of her other belongings, too. That made repairs and finding a new tenant easier.
When this tenant first moved in, she had a daughter and mother with her, both of whom collected checks from the state or federal government and those helped her pay the rent. She also wanted the large home because she had merchandise to store for a shop she owns. The daughter got married, and the mom moved to assisted living. The tenant finally realized she no longer needed a four bedroom, three and a half bath home.
Meanwhile, my husband spent money to help her move most stuff to her new home. He paid movers to pack and move all the big items. He did all he can to make things easy for her – and he wasn’t getting any rent money for the home during the last three months she was there or the last month when she had still not completely moved out.
One problem with caring about your tenants is that you barely have enough to meet your own needs. We have to borrow to fix up vacant properties while they sit empty, collecting no rent. Following the Golden Rule can be expensive, but it helps you sleep better at night. It doesn’t make you rich fat cats.
Have you invested in real estate yet? Are you a landlord? Free free to share your experience in the comments below.