Based in Los Angeles, The Money Smiths is a blog comprised of thoughts related to personal finances, real estate investing, and musings on early retirement.

Our First Investment Property

Our First Investment Property

In my first post, I mentioned real estate four times!  I was actually shocked as I looked back at that, because as my friends know, real estate is my favorite thing to talk about.  This post is going to be dedicated to talking about the actual process that Mrs Money Smith and I went through in purchasing our first investment property.

The year was 2015, Mrs Money Smith and I had been dating for three years at this point.  We had both graduated college and were living in the Seabrook, NH. For those of you that aren’t familiar with Seabrook, it’s an interesting place.  We moved there because logistically it made sense as it was about halfway between both of our jobs. While living there, I constantly harassed my then girlfriend about buying an investment property but she insisted that she wouldn’t even consider owning a property with me until we were engaged. Well, about three years of being together made it pretty clear to me that my girlfriend needed to be my Mrs Money Smith.  So what did I do? I asked her to marry me, and lo and behold we started looking at investment properties that very next week!

This sounds funny as I write it, but I think there’s a key takeaway from this intro: Having two incomes significantly improves options when it comes to financial decisions.

Since we decided that we didn’t want to be engaged for more than a year, there was a significant amount of work that needed to be done in just twelve months. To ensure that both of us were happy, we needed to:

  1. Set a wedding date

  2. Buy our first house

  3. Plan the entire wedding

  4. Get a dog??

The wedding date itself was easy enough, all we had to do was let the fiancée decide whatever she wanted!  The rest of the year would turn out to be something quite interesting…

I told Mrs Money Smith that all she had to do was take care of the wedding pieces and I would handle the house.  So the weekend after getting engaged, we were already looking at real estate!

At the time, I was working in Lawrence, MA and Mrs Money Smith was working in Dover, NH. For a house to make sense, we needed it to fit the following criteria:

  • Must be located in between our two jobs

  • Must be a multi-unit house

  • Must be able to make us money!

Looking at the map, we essentially had two options for cities - Haverhill, MA and Portsmouth, NH. They both had appealing features, but we felt that the ability to make our money go further was within Haverhill.  This was mainly due to comparing the two cities on their percentage of multi family real estate, rentership vs ownership numbers, real estate taxes, and real estate prices.

Haverhill came out on top from our research, which lead us to the fun part - we had to find a home to buy!  The stock when we started our search was actually painfully low. There were maybe 5 houses that we had a chance to look at, of those houses, there were only two 3-family properties.  The first 3-family that we looked at was quickly ruled out due to being poorly maintained and in a bad part of town, on a busy major road to top if off.

Haverhill, MA - Not far from Seabrook!

Haverhill, MA - Not far from Seabrook!

This was absolutely discouraging for Mrs Money Smith.  Our very first attempt at looking for a house to buy and we came upon a slumlords masterpiece.  It was hard enough to know that there are certainly landlords out in the world who do the bare minimum for their properties and prey on those that aren’t fortunate enough to afford any better, but now we had to look at that square in the face and come to the reality that this would be happening so blatantly in the city that we wanted to invest in.

After a long conversation we decided that this was just the first property and we would need to push on to see more and to see what else the city had to offer.  This brought us to a duplex in the Bradford neighborhood of Haverhill. Bradford is known as the nicer part of Haverhill to many, due to location and a previous history that the towns have dating farther back than I would be alive to describe.  After our walk through, Mrs Money Smith was in love, she absolutely had to have it. I ran numbers on the property to see if it would even make sense, as our goal was really looking for at least a 3-family. As it turned out, we would have had to offer substantially under what the asking price was to have the property make sense from a cash flow perspective, the two of us talked through and decided that it wouldn’t hurt to just get an offer in.  Worst case scenario is that they just say no!

Bradford, MA - the 'nice' part of town.

Bradford, MA - the 'nice' part of town.

So the offer was written, well below what any sane person would expect to see, but they say that if your offer is accepted right away, you’re offering too much! Looking back, the rejection was honestly a blessing in disguise.  We really wouldn’t have been in the best financial position for ourselves if we had gone for the two family, but we could have made it work. The big victory that came out of the failed offer was that we had now gotten the entire process under our belts.  There’s something terrifying about your very first offer to own a property. Offering hundreds of thousands of dollars for something wasn’t an act that I committed very often, let alone ever before!

The stress of the unknown after that offer was lifted from our shoulders.  It made the rest of our process much smoother knowing what would come from something.  From quick Google searches, the average American buys anywhere between 1 and 5 houses in their lifetime.  If our plan was to buy more than that we’d have to get comfortable with everything in the process. Though slightly demoralized by the recent rejection, there was one more property that we had found on the MLS that we wanted to look at.  This was a 3-family property on South Pine Street.

If you’ve clicked around the website a little, you’ll know that this is the house we ended up getting an accepted offer on.  We still have the house now, and it’s been an immensely helpful asset to have and will hopefully continue to be one for many years to come. The house had an interesting story to it that we had to work through.  When we bought the house it had tenants on the first floor and tenants on the third floor. Both were paying rents well below market rate, so we knew this would be our first interaction with the new tenants, not the most fun you could have with introductions...

Without getting into the gory details in this post, the tenants on the third floor moved out about a month after we bought the house, as they too had just closed on their own property.  We had to end the lease for the tenants on the first floor due to them not wanting to pay the increased rent that we proposed, despite being well under fair market, which meant that we very quickly had to turn three empty units into three cash producing units!

The third floor rented rather quickly and was populated by a lovely young couple that still lives there today.  Luckily for us, the third floor was the most recently renovated unit, so there really wasn’t anything that we needed to do to get it rent ready, other than order a deep cleaning.

The first and second floors presented more of a challenge as they would minimally need new paint throughout, as well as some significant improvements for the first floor unit. I won’t speak for the work on the first floor, as I’ll let the pictures speak for themselves, as we essentially renovated the entire floor. The work on the second floor was a little lighter duty. The renovations included painting the entire house, tearing up carpets, and getting the entire unit ready to be populated by new tenants within a two week time frame.


I can happily say that from a cash flow perspective, the house has been positive each year.  The rents are only trending up right now, which brings a lot of confidence in our decision to have invested in real estate in the first place.  I think a lot of the right levers fell at the right time for us, but all-in-all I knew a few months into owning this property that I had only scratched the surface of what else was in store for the Money Smiths in the game of real estate.  I’ll go into more details about the specific numbers of the house in the bio, located HERE.

Also, I’m providing the bonus dog that we got right before we tied the knot at one of our favorite ski resorts, where we went on our first date. Who doesn’t like puppy pics, right?!

Now is the part where I ask the questions: How was your first house purchase? What went wrong and what went right? Share your thoughts and let's get a dialogue going!

His name is Captain <3

His name is Captain <3

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