How I Bought My First My First Real Estate Investment Property At The Age Of 14
“I Bought My First Piece Of Real Estate Investment Property At 14 AND Put Cash Into My Pocket”
As you may know, I was first turned on to real estate investing when I was 10. But it was four years before I was able to put down a contract on my first piece of real estate.
I would have tried to buy some real estate earlier, but I was stopped by one thing… and it wasn’t lack of money (which I didn’t have any). It was for lack of transportation. But I was lucky. A friend of mine that lived across the street from me was 16 and had a car. A few years earlier, when he was 13 I shared with him my collection of real estate investment books (The classics – Lowery and Allen) and we waited until we had wheels to get around.
A week after his 16th birthday we took his parents car to a local real estate office, walked in and told the agent that we were investors and wanted to look at property. We were asked to leave. We had to visit four more real estate offices before we finally found an agent. At first she didn’t take us seriously, for obvious reasons, but as soon as we began talking about property she realized that we did mean business. The real estate agent had nothing better to do so she took us out not expecting anything to come of it.
After showing us some of the most run down homes in the area, we found one that was perfect. It was an older home a couple blocks away from the local college. It could easily be divided up into 4 apartments and it had an FHA non-qualifying assumable loan. But the best part was, it had a dethatched garage in the backyard that was filled with used building supplies. Lumber, paint, windows, lights, plumbing supplies and more. Almost everything we would need to fix the house up.
Now I had money in the bank, but my parents would not let me touch it. So I had to figure out a way to raise the $3,000.00 I needed to assume the mortgage and pay for closing cost if I wanted to put a contract down on the house. Shouldn’t be to hard for a 14 year old kid… ha ha.
It was the summer of 1979 and I was 14. Me and my 16 year old friend, Charles, were working with a local real estate agent and looking at lower priced homes in my area when we came across a older home a couple blocks away from the local college for $10,000.
Monthly payments on the NQNE mortgage was $133 per month and we could EASILY rent out each “apartment” for $100 per month to college students which would be more than enough to cover any slow periods during the summer months.
There was a $7,000 NQNE (Non Qualifying None Escalating) mortgage on the home. So we could assume the note without any qualifications. That meant we had to come up with $3,000 down to purchase the home.
We offered to assume the $7,000 mortgage and let the seller hold a $3,000 2nd mortgage note for 10 years at 18%. This would mean that we would have to pay the seller $54 per month for the next 10 years.
The seller countered back with a $1,500 down payment and us making a $1,500 cash down payment, since he had closing cost and a commission to pay. We settled on us putting $1,000 down and him taking a $2,000 2nd mortgage.
We still needed to come up with the $1,000 needed to close on the property. Here is where we became really creative. We had a plan and had actually put in some language into our offer to advance our plan.
We stipulated in an addendum that the buyer (that’s me), before closing, would be allowed to bring inspectors and appraisers onto the property and that we could have keys and 24/7 access to property before closing. We also stipulated that we could remove any electrical items in need of repair for the purpose of repair estimates or appraisals as long as the items were returned within 24 hours.
As soon as our offer was accepted, we went into the home and removed one of the antique brass ceiling lamps that had wiring problems. The house had six of these very ornate brass lamps with painted ceramic fixtures. We took it to an antique shop that was a mile away and the owner of the shop inspected the fixture and offered to buy all six for $150 each. We were now looking at $900 towards the down payment.
We brought the antique dealer to the house and he offered to buy all the fixtures in the house, including some of the hardwood floors for a total of $2,000. We told him he could have it all for $1,500 if he would give us $1,000 down the morning we were to close and then the remaining $500 when he picked up the items after the closing. Since the antique shop owner knew he could get a better with us, we had no fear of him going around our backs to the home owner. But just in case we had him sign a non-disclosure agreement.
The day of closing Charles and I walked in with a $1,000 cashier’s check from the antique dealer.
The seller did make a fuss about our ages, but eventually calmed down.
After the closing the the antique dealer came to the house and removed all the brass lamp, brass wall plates, various other brass fixtures and some hardwood floors. He gave us another check for $500. We were able to replace everything he removed with cheaper new light fixtures, plastic wall plates, and a new floor all for $250.
In the end we closed on the home with zero-money of our own and put $250 cash into our pockets. At the age of 14 this was the first of many real estate deals.
