14 January 2015

How Real Estate Makes Our Sabbatical Possible


Many readers have wanted to know how we're able to just up and leave traditional jobs and travel the world, live abroad, etc.

The answer is real estate ownership. I once had a goal to buy a piece of real estate every year and I did it for 5 years, starting at age 24. That has benefited me well. Here's how it went down if you'd like to hear the nitty gritty...

How I Got Into Real Estate



Buying real estate in Brooklyn at age 24, while single, was kind of an unheard of move. None of my peers owned real estate at the time, let alone in New York City. But I just liked the idea of owning my own place instead of getting roommates and paying loads of New York rent into someone else's pocket.

Now, you typically need some money to get started. Somehow I had a job that was paying decent money. Mind you, I sacrificed a LOT of ego to have that job. This was my first full time job in NY and I was a receptionist at a hedge fund. It felt so, so below me. (I had much better jobs in high school and college). ha. But who knew that receptionists at boutique financial firms could make a decent salary + a big NYC bonus + insurance and meals paid in full. It was enough to buy real estate. So I took the job. I had big plans on the side.

MY ADVICE: Proving income is necessary to get a mortgage. So if you have a job, don't waste time (It's harder to get a loan if you're self-employed.) Buckle down and buy something ASAP if you can! I think there are usually opportunities out there, no matter what the market conditions are (especially if you're buying a fixer-upper). Also, even if you don't love your job, you might find that working on your real estate projects on the side can make up for it and can be pretty darn fulfilling. 

My First Purchase

So, with my receptionist job (yep!) I went on a real estate hunt all by my little self and found the TEENIEST studio in one of the nicest neighborhoods in Brooklyn, on one of the nicest brownstone blocks. I still die over that location. But the apartment was a mess. Truly a mess. It needed a lot of work. It was also the cheapest thing on the Brooklyn market (by some miracle it was about 1/3 the price of other studios on the market at the time) and I figured I could make it great. I think the real estate agent was quite surprised when I said, "What do I need to do to buy this place?" (I had no idea how it all worked.) She said, "Make an offer." So I made an offer. The listed price was $79,000 (can you imagine?), so I offered $75,000. The owner accepted. I paid 10% down. I didn't quite have enough cash in my savings yet, so I borrowed I think $3,000 from my brother. Buying that 260 square foot studio was the best financial decision I've ever made. The value of it went up and up and up and led to so many future opportunities.

MY ADVICE: Do not think you're too young to buy real estate!!! I ALWAYS tell people, BUY REAL ESTATE WHEN YOU'RE YOUNG!!! Do ANYTHING you can to get into the market. Buy whatever you can afford. When you're young, you can work your butt off and you can also get away with buying the cheapest, smallest place if you have to. It's harder to survive in a starter home when you have 1 or 2 or 3 kids and load of furnishings. Another option when you're young and single is you can easily get roommates to help you pay the mortgage. Or you can fill your extra rooms with folks from Airbnb. 

My First Renovation

I knew the studio had potential. I wanted to gut renovate the bathroom and kitchen, sand and reseal the wooden floors, paint, and build a loft bed. I got two personal loans from two different banks (total for the two was $12,000) and I got to work renovating my apartment. I bought my first drill, bought gallons of paint, rented cargo vans for trips to Home Depot at 3 am, found out where lumber yards were in Brooklyn, where I could buy replacement tin ceiling tiles, and where I could buy white metal industrial kitchen cabinets from a warehouse somewhere in deep Brooklyn for $180. I dragged boxes of subway tile in a granny cart down the street until the wheels broke off and sparks were flying. I had also started dating my first husband sometime after my purchase. He helped me fix it up, which was great. I also hired a handy man friend from Utah who helped with some of the projects I couldn't do. And I hired a plumber, a tile guy, and an electrician off of Craigslist. It all came together and turned into quite a handsome little home.

And my mortgage payment was only $495!!!!! $495 in New York City!!!!!

MY ADVICE: Do. It. Yourself - as much as you can. It will make you cry, probably bawl, spit, sweat, and cry some more. It will push you to your absolute limits and you'll probably throw dishes (I did). But you'll save a TON of money and learn a lot. You'll have a massive sense of accomplishment when it's done.



Investing Some More

So, I lived in that apartment for about year. I lived very, very frugally and quickly paid off all my debts to my brother and to the banks (for the renovation loans). I also got a new job (and more money) at another hedge fund working as an administrative assistant for a CFO. Also, it turns out that interest rates PLUMMETED. So I decided to refinance the studio and take CASH OUT to buy another apartment. Yes, I actually took $23,000 cash out for a down payment on my next place. The most amazing thing is, my mortgage payment at the studio remained the same ($495!!!) One of my favorite things was to look at real estate listings up and down 7th Avenue, on Craigslist & in The NY Times. I also went to open houses like it was my job. And so when the time came, I was ripe and ready to buy the next property. I rented out my studio and began receiving my first passive income. Because of the renovations and location, I could rent it out and make $700 profit a month. Not bad. At this point, I was completely addicted to real estate!! Oh yeah, I read Retire Young Retire Rich & Rich Dad Poor Dad. That only fueled me even more to acquire assets.

MY ADVICE: ALWAYS pay attention to interest rates and let them work in your favor!! And, if you're interested in obtaining real estate assets at anytime in the future, you should be looking at listings NOW like it's your job. This is how you can be prepared to make smart decisions and get good deals. 



Make Low Offers & Negotiate

That second apartment I wanted was listed for $275,000 (this was in 2002, mind you.) This was actually out of my price range, but I figured that it never hurts to make a low offer to just see what might happen. My husband at the time thought I was crazy, but I offered $215,000. ha. Why not. The offer was declined and we kept looking. But I noticed that the apartment continued to have open houses (watch for that!!) It turns out that buyers kept passing on it as it didn't have good closet space. And so, I went in with another offer: $225,000. This was declined as well, but I haggled back and forth and I got the apartment for $235,000 in a FRENZIED market when most places were going over asking. Not bad. I was pleased.

MY ADVICE: Make an offer on just about EVERY apartment/home you would even consider, even if the price feels embarrassingly low. I say EVERY home has a price that you WOULD pay, right? If you're making the effort to see a home, you might as well follow through with an offer. You never know what position a seller might be in and it's a way you could perhaps get a great deal.

Live Frugally

I continued to live extremely frugally as I wanted to renovate my second apartment and also buy more real estate. I also got promoted again as the Personal Assistant to the CEO. My income and bonuses went up and up and up and I saved every dollar possible, including all of my bonuses. I never spent one dollar of those bonuses. I even had another couple live in my living room for 7 months. They paid about half of my mortgage which helped pay for renovations.

MY ADVICE: Cut corners in every possible way when you're trying to save money. Cut back or eliminate travel. Buy used clothing or none at all. Buy used furniture. Limit dining out or find VERY CHEAP restaurants. Buy used cars or have none at all. Eliminate all extra monthly expenses like gym memberships, magazines, etc. Cut back or eliminate expensive gifts and hobbies. Have potlucks instead of fancy dinner parties. I did all these things for years and it hugely paid off. For thousands of ideas on how to save money, check out one of my favorite blogs: And Then We Saved.  

Invest in a Market That Suits You

Pretty soon I bought my next asset: a fourplex in Salt Lake City. And then I bought a second fourplex, also in Salt Lake City. For me, this turned out to not be my cup of tea. In New York, my renters were responsible professionals making big money. Just about everybody rents in NYC and just about everybody has income of some kind (otherwise you can't survive there long). My rental apartment would rent in about 10 minutes after posting it on Craigslist. In Salt Lake City, on the other hand, the rental market was different. At the time, homes didn't rent as quickly + the type of people who were renting our apartments had risky financials (unstable jobs, low income, etc.) While not everyone with a low paying job will have trouble paying their rent, in my case most of them did. And too often my apartments were getting severely damaged by renters. Not only that, the renters would often TAKE things when they left. One renter left in the middle of the night and filled their camper with our appliances and even the hot water heater! Ugh. And so, I wanted out. I definitely had a better experience with the New York market and New York renters. We soon put the fourplexes up for sell. Luckily we still made a very decent profit on both of them. (Note: I have a friend in New York who started out his real estate career by buying LOADS of fourplexes in Salt Lake. He has done very, very well for himself. So I guess it just depends on what investment market suit you. I'm all about NYC.)

MY ADVICE: In my experience, owning in New York City is like owning a piece of gold. It's ALWAYS in demand and being a landlord there is a dream. If you ever live there, you should try really, really hard to buy something. I would recommend, however, to buy apartments you can later rent out in case you need to/want to. Most co-ops do not let you rent out and I think those could be a little more risky unless you're VERY confident in the market conditions and know you'll be ok to flip it when you move. Of course there are good markets all over the country. Think about what niche might suit you and go for it. 



Do What You Can

I was soon in the market for my 5th real estate purchase, a two bedroom in Brooklyn. This was going to be the home I settled in for awhile. This home was much nicer and larger than my first two homes. I felt really, really lucky to be in a position to buy it. It's only because of the real estate profits that I was able to buy it at all. I renovated it and it has been the best home and sanctuary to me after the divorce, while being single again, and while dating Danny. The rental profit I now make on that apartment is what is financing our sabbatical abroad.

Unfortunately, my real estate investments stopped for a few years because of the divorce and other ventures. Divorce was financially a big blow to my savings, which was a really difficult thing to face as I had worked so hard. Infertility treatments also put things on the hold. But oh well. Life doesn't ALWAYS turn out so perfectly.

MY ADVICE: Know that rough patches WILL pass. Even though you may experience set backs to your goals or may need to put them on hold for a time, opportunities WILL arise again in the future. I am currently wanting to get back in the real estate game sometime this year. I've been looking at buildings in Brooklyn like it's my job. :)

Do any of you have an interest in real estate? Obviously I love this stuff. Any tips, advice, or book recommendations would pretty much make me giddy. I've even thought about getting a masters in real estate at NYU or getting my broker license so I could broker my own deals. It would also be fun to bring investors together to work on some projects.



52 comments:

  1. This is so very inspiring!! I have been reading your blog for a while now and have also been wondering HOW you managed to get into the real estate market so young. I guess the illustration you make is that you don't have to be from a super rich family/have a huge handout to get into the market...just a drive to do it. And I guess having a really great job helped. Thanks so much for sharing!

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  2. Thanks so much for sharing your experiences with real estate. So interesting! My fiance and I have definitely talked about buying a place to rent out and this makes me feel more confident to be able to do so. Thanks again and have an awesome day, you two!

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  3. Dealing with poor people sounds like such a drag. Taco Bell? Ugh! Much better to let homes in NYC where there are no poor people. They can't afford it there, you see, so they have to leave and go to... um... poor people places.

    I know that I've exaggerated your words but that is very much the sense I got from this post. I am surprised and disappointed. I don't write this to hurt or anger you but to provoke you to think about your position on this. I have read your blog on and off for several years and I really admire the grace with which you have approached your own troubles. I respect you for that.

    However, you are promoting this strategy of earning money as if it is consistent with a life lived according to Christian values and with an emphasis on love, and to me, this way of earning money is exactly the opposite. It is motivated by the opposite of love: greed (people think that hate is the opposite of love but they are wrong. Love is selflessness. The opposite of that is selfishness, a.k.a. greed). You characterize renting as "paying rent into someone else's pocket". Which you felt was not good for you, right? So you decided to become that pocket. How is that ok?

    I was also surprised to see you equate live "turning out perfectly" with the accumulation of assets in your last paragraph. Like I say, I've been reading you for a while and I just don't believe that you think a perfect life is a life of accumulation. Life is so much more than money and stuff. For you and for everyone else. I wish you a good life but I wish a good life for that Taco Bell worker too. Being poor does not mean that a person does not have virtue or worth. Being rich does not mean that a person does have virtue or worth.

    I wish I could spend more time on this comment to make my thoughts clearer. Please think about how the decisions you've made in this regard fit into your worldview. That is what I'm suggesting. You can take it or leave it, I guess.

    Best wishes to you.

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    1. If you believe in the universe as being an infinitely abundant place, then there is no such thing as lack where "If I make a lot of money/make sound business decisions of who to rent to (completely their own perogative, by the way - it's a free world) then there's less to go around for everyone else." That is absolutely against the fundamental laws of this attraction-based universe. In no way does this have anything to do with compassion for poor people, not believing they have virtue, worth etc, and not being charitable in many ways.

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    2. Ouch! to anonymous posting at 11:21 am. I don't feel that you meant it, though. I sense a lot of hurt under all those words. God bless you :-)

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    3. I am the 11.21 anonymous poster. I meant everything I wrote. Although I hope that I was not overly hurtful or abrasive.

      As to whether my comment was motivated by personal hurt: it wasn't. I am not a victim. On the contrary, I had a privileged upbringing and I am lucky to have a career that I enjoy and that (I hope) makes a positive contribution to the world. Having said that, I did find the attitude towards poor people offensive. In that sense then yes, my comment was motivated by a kind of hurt.

      To the poster who writes about an attraction-based universe". Are you saying there is or there isn't an infinite abundance of resources? If you are saying there is then that doesn't make sense in this context. There might be infinite resources of intangible things but there is a limit to how much physical stuff there is in the world. If, on the other hand, you are saying that there are limited resources and therefore greed (a.k.a. rational self-interest, a.k.a. avarice) is necessary so that you personally have enough then you have been misled: there is more than enough for us all to live well in this world. Especially in this country. And besides, we are not talking about merely being able to live well.

      To your point about poor renters having a choice: What are the other options for a poor person (who cannot, presumably, afford to buy a home)? Living on the street? That's not really a free choice, is it?

      Anyway, I was only suggesting that we all really look at our position in the world and think about whether it accords with our values. I believe that Mara (and most people) are essentially good people who wish to live good lives (that is, lives full of goodness), while also helping others to do the same. I don't believe that this is the way to do that.

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    4. Anon: I know you care for poor people, but your comments make little sense and lead to nowhere. Yes, rent is putting money into other people's pockets, which Mara preferred not to do. So your conclusion seems to be that no one should ever be a landlord. Or that no good, caring people should be landlords. I'll leave it to you to somehow redesign the entire housing market in the US so that it's either all government owned or so that literally every person owns their own place. Those seem to be the only two other options, neither of which will happen in our lifetime, so it seems you are complaining for no reason. If there are going to be landlords in this world, I'd rather they be people like Mara. I assume that Mara's places are fixed up beautifully and are pleasant homes to live in. I assume she charges fair rent. I assume she's an ethical landlord who fixes problems and doesn't cheat people. That's the type of landlords we should want in this world, and there are plenty of bad ones.

      Everyone needs to give back to society. I know that Mara gives back in many ways. Perhaps she does not choose to give back through free housing for poor people, but as long as she's contributing to society in other ways, that's fine. I'll condone you being self-righteous when you've given away all of your money to the poor and when you buy real estate to shelter the poor for free.

      Finally, though I winced a little at the Taco Bell comment, Mara is only telling the truth. Renting is different in different demographics, place, and income levels. It's just a fact that has been researched plenty. It might make you uncomfortable, but better to know the facts so buyers can choose markets that work for them. Here are the facts, which are supported by research, to renting to lower-income people (in general, obviously not applicable to all lower-income people): you will have more turn-over, your place will get damaged more, you will have a harder time consistently collecting rents, people will be more likely to break leases and steal from the home, there is more likely to be domestic violence and certain other crimes in your unit, and other challenges. Those are just uncomfortable facts. Some real estate investors have entire portfolios made up of low-income housing because they don't mind dealing with the challenges, and their rent is reliable because it mostly comes through Section 8 grants. But there's no point in pretending that these challenges don't exist. And there's no point in acting like it's somehow wrong to rent to the poor or to choose you're not suited to owning property in challenging areas. I do know that the poor deserve quality, ethical landlords. So perhaps we should be encouraging people who are good people to go into this type of business rather than bizarrely criticizing them as if being a landlord is inherently evil.

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    5. "If there are going to be landlords in this world, I'd rather they be people like Mara. I assume that Mara's places are fixed up beautifully and are pleasant homes to live in. I assume she charges fair rent. I assume she's an ethical landlord who fixes problems and doesn't cheat people. That's the type of landlords we should want in this world, and there are plenty of bad ones. "

      YES! A few months back, I made an overly-dramatic comment to my mom about how I don't know how anyone could feel good about being a landlord, and she said something that kind of/sort of changed my perspective. She said that she is actually THANKFUL that landlords exist because if they didn't, anyone who couldn't afford to buy their own house would have to sleep on the street! I'm still not convinced that landlordship (is that a word?) is ethical at its core, but since it's not going away anytime soon, I instead wish for more Mara-like landlords :)

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  4. Woah -- is that 260 sq ft apartment with the lofted bed the apartment that Erin from readingmytealeaves.com used to live in??

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    1. No, it's not the same one. But I LOVE reading her posts about living in a small space! And I really adore Erin. I met her once at The Natural Beauty Night I held and she is simply wonderful.

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  5. Great post, thank you! My husband and I were able to buy into a neighborhood in Boston we wouldn't normally afford by purchasing a foreclosure. Being first time homebuyers, we had an edge over others, especially contractors who were required to wait a period of time before they could put in an offer. We recently bumped into a realtor who said he could sell our house for over three times what we paid for it!

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    1. Oh, amazing!! How did you get tapped into foreclosures?? I've always wanted to figure that out. It seems harder to do in big cities for some reason. Also, we adore Boston. And congrats on your rise in property value. That is amazing! We also have a condo in Boston, which hopefully will be a good long term investment. Currently our renter is paying all the bills there so we're quite happy about that.

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    2. Oh how nice to have real estate here! We LOVE living in Boston. Our experience, and other people we know, has been that real estate is a good investment here.

      It's kind of a funny story! We really didn't know much about foreclosures, or even real estate for that matter. We just knew we wanted to live in a certain neighborhood and followed the market like a hawk. The day the home we bought went on the market we viewed it with our realtor. There were about 20 other people looking at it at the same time! We put in an offer that same day and learned a couple days later another person's offer had been accepted. We were so bummed, we took a break from following the market. 2 weeks later my husband just happened to put a real estate app onto his new iPad. When he did, he noticed that THAT house had been put back on the market a couple hours earlier and they were only accepting offers until noon the next day. Crazy, right!? We still aren't sure what that was all about. Thank goodness for a Johnny-on-the-spot realtor who answered her phone at 9:00 pm! We were barely able to get our offer in on time the following day. That time it was accepted!

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    3. This story is UNREAL! So, so cool.

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  6. My hubby and I are old, comparatively, but we have turned our savings into 2 rental homes, completely paid for. Both were stick built homes that needed moved due to other construction. We live in central Arkansas where land is fairly cheap and building easy and the norm but we felt we had the skills to renovate ourselves but not necessarily the skills to build from scratch. Besides, it's so much fun to make a doggy place look pretty! We've been able to attract great renters because our properties are very nice. They look brand new and are in desirable areas. We'd like to do another - when savings and energy build up. There is no way we could invest the money we have in our rental homes in any other venue and get the same kind of return as we do in rent. We've done smaller homes instead of duplex's or multi family as I think we can always sell should we need to liquify our assets. Good luck in your market.

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    1. Such an inspiring story! Thank you so much for sharing. And what a creative way to get a rental property. I've never heard of that kind of thing but I love it.

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  7. Hi Mara

    This is SO thorough and inspiring. You often hear people say they are able to do 'more' because they invested in real estate, and I just thought that meant buying a house and selling it in a sellers market. Your description really spells it out and provides such great detail - thank you for sharing! Always so inspiring to read your thoughts and opinions. They really are insightful and sometimes point me in another direction I hadn't thought of. Hoping all is well in Cuenca and that Sila and Ellie are becoming the best of friends!

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  8. Loved this informative post. We've always thought of buying and renting out houses, but worried about the time commitment of being landlords, such as if something needs fixing.

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    1. Yes, the time commitment can be a risk. However, in New York and Boston (where we also have a condo), the time involved in being a landlord has been so, so, SO minimal. We have always had the most amazing renters and they have left our apartments pristine. It could be that there is a lot of interest in NYC/Boston apartments and so as landlords, we have been able to choose the best candidates. The lack of wear and tear could also be because the people are professionals and working much of the day -or also, because they usually don't have children yet. Somehow, with our properties in Salt Lake, it was completely different. Every month there were clogged drains, holes punched in walls and doors, broken down appliances, etc. We couldn't even keep up with it. And one of the properties was even in the Avenues, a very expensive neighborhood of Salt Lake. Another idea could be that urban renters are instinctively afraid to "call the landlord" on too many things, afraid that their already very high rent will be raised.

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    2. Appreciate your reply. Thank you!

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  9. why did you choose to invest your extra money in real estate and not stocks, bonds, etc? I've heard that that's a better route in the long run and also less hassle (dealign w/ renters, repairs, etc).

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  10. I was able to invest in a hedge fund and that yielded my best returns to date. Unfortunately I don't know very much about the stock market, though I have always thought I should hire an advisor and get some investments going. Also, I do just really like buying and selling real estate. It's really fun for me to find a property, negotiate, envision a renovation, make it happen, etc. It's very hands on and fulfilling. Also, my taste seems to match well with the Brooklyn market, so it's a way for me to capitalize off of that. Also, as stated above, I haven't had any hassle with repairs or renters in the Brooklyn/Boston market. It has been so very smooth sailing.

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  11. awesome! I love the idea of renovating houses/apartments but then I think it might be more fun to work on my own place (someday when I actually have my own place) and invest any extra money I have in hedge funds, stock market, etc. Then all my free time can be spent traveling or studying, ha!

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  12. We see our investment properties as both our life insurance and our retirement. We own three properties and will be closing on our 4th next month.
    Our time investment as landlords has really been minimal. And the steady income we've received for eight years has helped when our industries slowed down during the recession.
    One thing I might add--we've had good success zoning in on a neighborhood and sending personal letters to the homeowners. Basically just telling them we are looking to purchase in their neighborhood and if they are ever thinking about selling to let us know. It helps that I'm in real estate and my husband is a general contractor and home inspector--but saving realtor fees as a seller can make a big difference in price.
    PS--my husband did your bathroom renovation back in 2004 or 2005. :)

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    1. Jen, DYING over this comment. How fun to read your P.S. :) :) That certainly took me back. Your husband was one of the hardest workers I'd ever seen. He did SUCH a good job on that bathroom. I couldn't believe what he accomplished in such a short amount of time. I have always felt kind a bad because the job was probably such a pain in the butt. As in - just getting stuff up the stairs to the 3rd FL and double parking, etc. Oh my.

      Also, LOVE your idea of sending letters to home owners in hopes they might sell. That is BRILLIANT. It seems it would be a win win as they wouldn't have to pay commission to a broker. I totally want to try this.

      Also, you guys are a dream team buying those properties, being the broker & contractor, and renovating. That is just so dang cool. Way to go. So, so inspiring! XO

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  13. I really enjoy this blog and this post, but I'd urge you to please consider taking down that Taco Bell remark. (And maybe the one about the secretary's job being beneath you?) I can't imagine you meant either to be hurtful, but they are. I once lost my job and had to get 2 jobs to make rent--one at Target and one at Home Depot. My rent comprised 65% of my take home pay, but I busted my butt and never missed a rent payment. I was really proud to be doing what it took to pay the rent, and I took excellent care of my apartment. There is NO job that's beneath any of us, and no job that warrants being looked down upon.

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    1. Rather than choosing to interpret Mara's comment as offensive, I chose to interpret it as her just being honest about natural feelings that most of us would have. Yes, most smart college graduates would see a receptionist job as being beneath them or at least beneath the expectations they had for their career. It's just an honest thought process - not good or bad. And I saw it as a strength that Mara got past those thoughts and took the job anyway. There are so many people who don't take jobs they think are "beneath" them. Instead, Mara's story shows that sometimes you do need to just take a job to earn money or that your 9-5 job can serve a higher purpose even if you don't like it or that you can have a 9-5 job you don't like while pursuing a passion on the side. I have always been willing to take any job (even returning to babysitting when almost 30 years old with degrees and professional experience) to pay the bills, take care of myself and be responsible. I know so many people who would rather be in debt or be on government assistance instead of taking jobs they don't like or that are "beneath" them. Mara's message is to work hard and to take jobs that might not be great if that's what you need to do in the moment. That's great. She's not looking down on anyone despite the choice of words.

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    2. I take issue with the idea that any job is beneath anyone. Lots of people are secretaries for life, and thank god they are! We need secretaries. It's just not at all compassionate to state publicly that a job is beneath you. (Can you imagine being a secretary and reading this blog right now? That would hurt a lot.)

      And to point out that someone who works at Taco Bell is not a desirable renter...also really hurtful.

      I was a nanny for a bit, too. Also with lots of professional experience, also with a couple degrees. But some of the women who'd been doing that work for years ran circles around me...they were far better at the job than I was. So to think I was "overqualified" or "overeducated" is just wrong.

      Dignity in all work is what I'm asking for here. That means we don't judge any job or any person in it. I have no idea what Mara's intentions are. I'd assume they're very good, as she seems to be a compassionate person. But I know that the words were hurtful and that seems to be very much against her message.

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    3. Completely agree with first anon. Those remarks really grated me too.

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    4. Anon 7:30. You might be interested to know that I remained an admin assistant in NYC for 10 years. It became my dream job. And I just might even go back to it.

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    5. I normally don't chime in but I loved this post because I have a real passion for real estate too... (we own a 2 family investment property in Boston). We lived in each unit while we renovated it (and used the rent from the other unit to make our cost of living very minimal) and eventually saved enough to put a hefty deposit on a home we would never be able to afford. The money we make from the rental helps pay our current mortgage while we continue to pay build equity. Like another poster said, my 2-family is my baby's "college fund". It is a wonderful asset. But the other reason I felt compelled to weigh in is because I'm an admin at a hedge fund too. Unlike the person who thought I'd be "hurt" to hear you say the job is beneath you - I related 10000%. I struggled a lot with that in the beginning of my career but alas, I am truly at peace with it and like what I do and the financial freedom it has given my family. Sooo - long way of saying, as a secretary - your comments were not hurtful in the slightest! From one EA to another, high five.

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  14. Thank you for this informative article, Mara. It's really interesting to read specifics and for you to be so honest about the process.

    It's also inspiring to realize how much you did on your own, especially regarding renovations. I'm so intimated by that, and when I was on the condo market, I was turned off by anything that wasn't in perfect condition. Obviously, that's an expensive way to look at real estate! Logically, I get that I'm smart enough to learn how to fix up a condo. But emotionally, it seems so unknown and overwhelming and I feel like I'm jumping into a shark tank (like how I feel when dealing with car repair and mechanics). I love that you were so scrappy and hard working, especially with your first place!

    My question: Have you kept all of your units in NY? Why did you decide to keep them rather than selling once they'd appreciated a ton? I imagine it would be tempting to just cash out and not deal with the work of renting.

    A caution to other readers: Please don't get yourself into a mess with real estate and debt! This worked out for Mara because she's really smart and really hard working and she also had a lot of good fortune (timing, getting into the market at a miraculously low price, no major dramas with renters, etc). So many people create giant financial messes with real estate, leverage themselves to death, and end up in bankruptcy. Do not become a real estate owner unless you're debt free, you've saved a responsible down payment, and you have an emergency fund to cover a loss of job or unexpected expenses that can come with owning. Being a cash-strapped landlord is not fun. Property values won't always rise (especially outside of a few major hubs in the US). You might get yourself caught in a recession - seriously, don't buy in a boom expecting values to go up forever. You might rent to someone who is crazy, who sues you, who doesn't pay rent and refuses to move out, who trashes the place and disappears, etc. There are so many ways that owing real estate and being a renter can turn out badly, and you need to be prepared for the good and the bad.

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    1. Also, forgot to say this: Thank you Mara for emphasizing frugality! It's so important. So many people think they can't afford what they really want without realizing that they are spending away their dreams on all sorts of little luxuries or splurges. It's also so tragically common these days for people to think that luxuries (eating out, for example) are necessities. Frugality is powerful. So is conscious spending and being willing to sacrifice and be a little uncomfortable in order to achieve one's goals.

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    2. Two of my NYC apartments were coops, so eventually I sold them both. (Typically, coops have more restrictions than condos when it comes to renting out apartments over time.) I sure wish I still had those two places. But luckily I was able to time the sales during a very decent market. Of course the market has gone up and up since then.

      And thanks for your word of caution. :) Real estate investing is certainly not for everyone and it certainly can be risky.

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  15. Let me be clear, since several are assuming things and putting words in my mouth. This post is NOT about the worth & virtue of people who have low paying or minimum wage jobs. EVERY SINGLE PERSON HAS WORTH. Minimum wage jobs are a GIFT to many at various stages of life. I grew up very, very poor. Please do not think I don't know the value of ANY job. I am simply sharing my experience as a landlord. Period. And my experience was that my renters with low paying jobs had risky financials - this led to very, very high risk on my end. I was not in a position to subsidize people who could not pay their rent. Certainly not everyone with a minimum wage job will have trouble paying their rent. But it just wasn't a risk I was able to take.

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    1. I've read (and enjoyed!) your blog for years now. But when I read the Taco Bell comment, it rubbed me the wrong way, too. Because it's lumped in with your statements about the "types of people" you came into contact with, I think that makes it easy for readers to jump to the conclusion that you're making a stereotype (and a yucky one, at that). Which not surprisingly, has offended some. From what I've read about you and the way you life your life, I was able to tease out my interpretation of and kneejerk reaction to the statement and put it more in the context of what you probably actually meant (and I figured wasn't intended to come across the way it sounded)...but it still stuck with me, which is why I've come back to the post to see the discussion that's ensued. On the other had, I think that the comment you've just made here does a great job of clarifying what you really meant and would totally change the tone of that portion of your post if you went back and added it in. I don't think that calling out fast food workers does anything to add to the narrative in any way—but that's just my two cents. :) Otherwise, loved the post and find what you're doing to be amazing!

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  16. The Taco Bell comment felt yucky to me too. My mom was a waitress from the time I was born until I was 13. When I was 13, she severely injured her back on the job and spent 2 years UNEMPLOYED while going to graphic design school. The thought of a landlord thinking of us as undesirable renters due to our circumstances, well, hurts. The truth is, my mom paid rent, in full and on time, 100% of the time. She even paid for new carpets (yes, for a rental!) and built/installed storm windows due to the severe lack of insulation. Even people with low-paying, unstable jobs can still be excellent renters.

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    1. Yes! I do agree! They certainly can be excellent renters. I just had way too many cases of bad luck and I didn't have the capital to keep holding out for good renters.

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  17. We are currently under contract for our first home...a cheap one ($86,000) with fixing it up in mind...this got me fired up to start working on it. We are in florida where the real estate market isn't quite as stable, but there is a military base here that (so I am told) means things rent very easily. perfectly timed post

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  18. I've read your blog for a few years now and have always enjoyed your posts. Today was the first time while reading that my eyebrows were raised. I don't think you meant it mean or malicious but the 'Taco Bell' comment is in very poor taste. I 100% believe that people are much too sensitive about what others say now-a-days, but this comment is just unneeded. I understand there are generalizations, and typically for good reason. But I would hope you would not assume someone is deemed unworthy of renting a home due to their job that you seem to think is shameful.

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  19. So true about NYC real estate...I always wish I had bought sooner than I did. I bought a 1bdr on the upper westside which was down the block from where I had lived for years. I renovated it (so much fun!), and ended up selling it 3 years later for about $100K more than I bought it for. Which, in turn, set me up for the house I am currently living in. ONE NOTE about real estate if we are giving advice to those who might be interested...it is both a money and TIME commitment. If you are not looking to be locked down under these pressures, another way I have profited was by investing in the stock market. I used to do a lot of freelance work, and would choose a stock to buy instead of spending the money. So, my Apple stock whim 12 years ago has really paid off...much more easily than my real estate venture, but both were definitely the best financial moves I ever made! Also, I might note (as this is rambling), that most women, esp young women are not encouraged (or taught) to take financial matters in their own hands. Wait till you get married, right? WRONG! You will never be sorry to educate yourself in this matter! And, not all husbands are financially savvy! I could go on and on about this, but I really think men would not need to make as many apologies about making money and wanting to make money than a woman ever will...just read the comments here!

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  20. Hi Mara! I think this is soooooooo interesting, thank you for sharing! Diversifying income streams has been on my mind lately, and your story presents an intriguing possibility. I hadn't really thought to do it that way - buy, live there/renovate, then rent and buy up - but it does make sense. My model was more the "live there and rent the basement to college student" concept...
    I'm curious about your "landlording" experiences in a city like NY. Do you have an arsenal of handymen in case something happens? Anything to consider in the life of a landlord?

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    1. I have actually never had to call a handyman in NYC for a renter. When I was renting out my studio - or while renting out my home now - I've just made sure the apartment was in good shape before someone moved in. I'm telling ya, New Yorkers work so much that I think the wear and tear on apartments is less. Maybe unless they have kids and dogs. But so far all my renters have been single without pets. It is a good idea to have some contacts of plumbers and repairmen, if needed. I do have a list of people I have used in the past (for myself) so I have people to call, if needed. One thing you can do is pay your renter to fix things, if they happen to be handy themselves.

      I've also tried to be friendly with our renters. For example, sending them a list of our favorite restaurants, sending them notes seasonally with ideas for things to do in the area. If we're in town, I write them to let them know in case there is anything they need. This keeps the connection friendly and positive.

      Also, for my latest rental, I used an agent to find a renter. The renter then would have to pay the agent a fee (a % of the yearly rent.) That fee isn't exactly cheap and I've been torn about just putting it on the market myself through craigslist or NY Times. But with the agent, it seems that everything gets done super professionally. They have all the forms, etc.

      I am sure there are so many other things to learn from being a landlord. But I've just been so lucky that I haven't had to "learn the hard way" or anything. I just make sure the renter has decent pay (have them submit offer letters or paystubs). It's also a good idea to have the employer submit a reference letter. There are lease applications you can find online. And also, just make sure you get a deposit for any damages. Usually it's one month rent, which in NYC is usually a lot of money (easily $2k-$5k nowadays). So people generally don't mess with that. They generally will leave the apartment in good condition as they absolutely want that deposit back.

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  21. I really enjoyed this post! It was very informative, easy to read, and I could tell it had lots of great tips. Personally I don't think I'd have the wherewithal for real estate investments, but it was really interesting to read about.

    I also really enjoyed the super thoughtful comments, both complimentary and critical. I appreciate that people expressed their criticism honestly but with grace and I think that speaks to the sort of people who read this blog. As far as the "Taco Bell" comment, I assume it's been removed as I can't read it.

    But shouldn't it be considered more a statement about Taco Bell than about Mara? Few can dispute that most fast food workers live below the poverty line and would struggle to provide for their families on this income.

    I appreciate your honest, realist statements, Mara, and I'm glad you haven't taken them down.

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  22. Mara - I'm sure some of these comments have been taxing on you, but if you have the time, I'd be curious to know the following:

    1. How did you get knowledge to renovate your places? I am SO intimated by that. How did you have a clue what to do? How did you hire people? How did you know what would look good? How did you even figure out things like that white industrial cabinets exist and that you could buy them cheaply near you??

    2. How do you find renters and screen them? Have you found questions over the years that work well? How do you check their financials? Have you figured out other things that tend to indicated whether someone will be a responsible or irresponsible renter?

    Thank you!!

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    1. Ah, thanks for the note. I do know that these days, sooo many things are blown out of proportion. People make so, so many assumptions online. In one blog post, there isn't enough space to iron out every single assumption that someone might be making. So in a way, it's kind of easy to ignore. Though it's sad to see that the online culture has become so quick to pounce when they seldom know the whole story.

      OK -
      1. I didn't have any knowledge. I just figured it out as I went (on the first property). I mentioned my boyfriend at the time was helping me and he was figuring it out, too. These days there are SOOO many tutorials on youtube for all things related to renovating. I also got a couple of books. When it came to hiring people, at first just got people off craigslist and winged it. On my second place, I hired a contractor for the bathroom, based on the recommendation of a good friend - then my husband and I did the kitchen (Ikea cabinets). On my third NY place, I hired a contractor for the entire thing. This contractor had already worked for a few friends, so I had good recommendations. The white metal cabinets I saw for sale at Home Depot. They were industrial cabinets for garages. They didn't quite have the configuration I wanted, but I saw they had other pieces available at the company. So I drove out to the place myself and got the exact pieces I needed. Regarding knowing what looks good - - - this is something that has evolved over the years. My taste definitely evolved a ton when I moved to NYC and became surrounded by designers and creatives in Brooklyn. I began to develop my own eye for things. And now people sometimes ask me if I am a designer. (I wish. I have learned a ton, but there is certainly still so much to learn.)

      2. Craigslist. Or more recently, hired an agent. Questions: how long have you lived in the city, what is your job, how long have you had it, how long do you anticipate being in the city, how long did you live at your last apartment, etc. It's more about striking up a conversation and getting a feel for the person. You could say, "I have other renters interested and will have to choose between a few of you, why do you think you would make a good renter?" And just see what they say. :) You can have them fill out an application (look for one online). They can submit their financials that way. You can get letters of reference from their employer and their former landlord. You can ask for paystubs or offer letters (if it's a brand new job.)

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    2. You can also check a renter's credit. I actually never did this in NYC (though my property manager in Salt Lake did it for me there.) This will tell you a lot about someone's financial risk. I forgot to mention that while renting my fourplexes in SLC, it was nearly impossible to find someone with good credit. Again, it was just a tricky market which made it extremely risky as a landlord.

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  23. This is fascinating and very inspiring. I wanted to say two things: one, that one intrepid company is making it possible for everyone to invest in commercial real estate, which is traditionally a huge wealth-creator (although the regulations around this are so complex that they've run into many roadblocks), so if you're interested, check out www.fundrise.com; and two, that I think it's important to recognize that the market plays a huge role in how successful these investments are. NYC has been a great place to invest in real estate at pretty much any point in time, but if you had, say, bought a condo in Scottsdale, AZ in 2006, you might still be under water on that investment. Just something to keep in mind.

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    1. wow - I had not heard of Fundrise. SO interesting. Thanks so much for recommending them...it would be amazing to try something out. And yes, couldn't agree more that finding a good real estate market is key. Though within each area, I still think there are good opportunities depending on what you're doing, your capital, your timeframe, your skill at renovation, etc. Though finding your niche can be tricky (and very expensive, if you make some mistakes).

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  24. Hi Mara,

    I'm writing a little late, but I hope you'll have time to answer. These comments got me thinking that maybe my next career move will be to try to get into a hedge fund (in an assistant-type job, I'm not an econ wiz and don't have an MBA). It seems like a uniquely well-paid job, and like it would involve working in an interesting environment. Would you mind sharing information about the following:

    What's a typical workday like? What tasks did you do? What skills are necessary to do well?
    How do you break into the industry?
    What's the typical pay range one could expect to begin and then after some years of experience?
    Thank you!

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