My first house

red-house.jpg(this is not my house. just wanted to match my theme) Back in 1998 i purchased my first house. I was still in college at that time. I had saved up around $20,000 and wanted to invest the money. I met a real estate agent through my parents and i started to get interested. Back then, homes were really affordable. I bought my first duplex for $190,000 in Los Angeles, CA. Now, you can’t find a foreclosed home in LA for even $400,000. Why did i risk all of my saving and buy a property? Well, it made sense. It made simple mathematical sense. I put my 20 grand to cover the 10% down payment and closing costs. My mortgage and other fees per month was around $1,400/month. I rented out both units for $1,600. I was making $200/month and betting that the property would rise in value over the years. Obviously i made the right choice.

I’ve made several real estate deals after i graduated from university. I worked the usual 9-5 gigs after graduation and i realized that i hated it. It wasn’t challenging and i felt like a robot. I literally did 3-4 hours of work during my 8 hour work day. Most of the time i pretended to be busy in front of the computer. It’s really boring not having anything to do at work. I wanted a challenge and i wanted something bigger and better. Luckily i had equity built up from my investments in property. Thats how i was able to quit my job and back my own business ventures.

The real estate market is suffering lately. I know that it will bounce back up so I’m not that worried. Most of my properties are in Southern California. Historically, prices swing up and down, but always end up higher in the long run. Look at real estate prices of all major cities. New York, Tokyo, Seoul, San Fran….It’s a monopoly situation and you just have to buy and hold. Just make sure you have cash flow and can cover the mortgage. The prices are so high now, that it’s difficult to cover the mortgage with rental income. But it’s still possible to find the rare gems.

Why am i talking about real estate? Well i think it’s similar to websites. Actually, one can argue that investing in websites is better. Take for example the recent sale of cashquests. Here is a blog that costs around $10/month to operate with around $1200/month in income. It sold for $15,000. Of course a lot of time was invested to get it going but still still very good ROI(return on investment). So you take that and multiply that by 10. Ten blogs or websites that costs $100/month to operate. If you grow it for about a year and sell for $10,000 each, you’ve made 100 grand. Now we’re talking about some serious money here. Or you can monopoly it and not sell giving you a monthly income of $12,000/month.

Of course it’s not that easy, but isn’t it worth it for $10/month to try?

9 thoughts on “My first house

  1. Allyn Paul

    Great analogy Noob. I’ve flipped houses on and off for a few years now. I buy em cheap, dump around $30K into them, and sell them immediately. I’ve never lost money, but found the headaches outweighed the monetary gain. The thing I mostly liked was actually pounding nails and laying tile…it made me feel like a character in a country music song.

    Recently, though, I’m outta the house flipping game.
    On to the website correlation, I agree with you and also like the risk/reward factors involved.
    I would think that just about anybody could take a website’s value up to $1,000 minimum. But you might get lucky and find one that becomes valued at that $10K mark.
    In this sense, it is just like realestate. Some properties rise in value slowly and you cash out quickly and reinvest…then others skyrocket with no known explanation but you still reap the rewards.
    ramble ramble….

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  4. the noob Post author

    yisei- yeah. i was good with saving money when i was younger. wish i could say the same now, but got too many bills to pay now. 😉

    allyn- this is a late reply but i wanted to thank you for commenting. i don’t think you’ll ever see this reply but thought i’d throw it out into the cyber universe. You were one of my first blogging friends. i hope all is well with you and hopefully when the market swings back up, we can make some nice cash with properties again. virtual and real. 😉

    fortheloveofcuppa- haha thanks. u just came here cause i said you’re hot huh?

    jumblespot- i just picked up the pictures in one of the real estate forums. don’t know who owns it and don’t know who designed it. yeah it’s a sweet design. wish i could afford something like that. 😉

  5. amador realestate

    Very nice post. I just stopped by by your website and wanted to say that I have truly enjoyed checking your posts. Any way, I’ll be subscribing to your feed and also I’m hoping you post again soon!

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