Financial Independence Retire Early: The sparks ignite

In 2001, I was 21 The phrase “financial independence retire early” did not exist. But I knew I wanted it.

Have you wondered how to get started in real estate without knowing much of anything or having much money? Well here’s my story. I walked into a real estate agency a couple miles from the apartment I was living in for the previous few months. I said “I want to buy a house”. They laughed at me. They did not take me seriously. I dressed like I just woke up and I looked 18. I told them I was making an offer on a house today, I just needed someone to show me what to buy.

Why didn’t I realize I was young? I never thought about it. People felt the need to tell me I was young often, but I didn’t think about it. Instead I kept dwelling on how much rent I spent on an apartment in the three years I was in college, when instead I could have owned the house and sold it when I graduated. The point here, is don’t listen to what people think. Be you. Most people retire in their 60s. You don’t need to be most people.

The agents asked if I had a pre-qualification letter for a mortgage. I had no idea what that meant. So I had to let them know I wasn’t pre-qualified, but I was very serious. I told them my income and my price point was under what they knew I would be approved to borrow. But they weren’t happy. They thought I was wasting their time.

So they went and got Elmer from the back. Elmer was an old man. If you averaged our ages, the number was probably 45. In retrospect Elmer appeared experienced, but instead he was just weathered. He wasn’t excited. When he came around the counter and saw me his shoulders dropped. He sized me up immediately as a waste of his time. I sized up that his time wasn’t worth much. He did not want to work with me. But, I assured him I was making an offer today.

I knew essentially what I wanted. I’ll write about that some other day. But I had a niche in mind. We narrowed down the listings to half a dozen or so. He agreed to drive me to the houses. When he was driving me from house to house I explained what my plan was.

Everything has value to me. Everything. We would walk through each house. I would assign a value to it before looking at the list price. We would compare that number vs the listing price. We’d make an offers from there. I knew that at the right price I would be interested in buying any house. Sure there was due diligence that occurred before we walked through them, but I was going to make offers.

That’s the important thing here, and some foreshadowing to a theme that will exist through my blog posts to help you on your journey to financial independence retire early. Everything has some value to you. When the price is less than the value you put on something, that’s a buy signal. If a house was listed for 100k, and it was worth 80k to me, then I would offer for no more than 80k. It also takes the emotion out of things when you decide the value to you instead of focusing on the price to you.

I knew I didn’t know the reason for the seller to sell. With divorce rates as high as they are and with baby boomers leaving houses to fighting kids as often they do, I knew some sellers would be more motivated than others. I just had to find them. I would decide the value of each house to me and leave it to the seller to agree or not. It took all emotion out of it for me. I know I said that twice, but it’s important. Find ways to assign values to things before hand so when it comes time to negotiate you are doing it with logic and not your heart.

I ended up having an accepted offer on my second choice. It was actually next door to my first choice. We bought it for under list price and the seller paid towards closing costs. The sellers were building a new house built. So they rented the home from me while waiting to be able to move into their new home. Their lease was much higher than my mortgage payment and several months longer than I hoped. My out of pocket was $800. I was making 35k at the time at my job, yet I owned my first rental house.

I had become a 21 year old landlord.

The sparks of fire financial independence retire early were stoked. The plan was in the baby stages.