real estate

Carefully Crafting Financial Independence Through Passive Income

May 14, 2020 by sallyb.zhao No Comments
Notes for BiggerPockets Money Podcast 123
Guest: Avery Heilbron
Audio time: 1 hr
Read time: 2 min
One-line Summary

Learn how Avery Heilbron is planning for financial independence through real estate, with 5 units at just age 25.

His Journey with Money
  • Always been frugal, did not like spending money
  • Picked up a side hustle de-leading properties
  • Financial position after graduating college in 2018: did not have student loan debt, saved money from summer internships, had high-paying job lined up (data scientist/analyst for an insurance company)
  • Located in Everett, 2 miles outside of Boston
  • Started going to BiggerPockets meetups – met current real estate agent through this
First House Hack: Duplex
  • Started looking for houses end of 2018, closed March 2019
  • Used FHA loans because lower down payment (3.5%)
  • 1 unit is rented out to Section 8 tenants
    • Rather than a disadvantage as some investors might think, Section 8 is guaranteed, on time income
  • Numbers
    • $525,000 purchase price
    • 3.5% down payment FHA loan
    • Mortgage
      • Originally: $3307 / month, 4.125% rate
      • After refinance: $2850 / month, 3.375% rate
    • Unit 1 rent: $2400 on tenanted unit through Section 8
    • Unit 2 rent: $800 for roommate, $400 for girlfriend
Second House Hack: Triplex
  • Started looking about a year after the first duplex
  • Also used FHA financing (converted duplex into investment property)
  • Two units currently with tenants, 1 vacant unit that he’ll move in to
  • Strong buyer’s market allowed him to get this great opportunity
  • Numbers
    • $800,000-value property bought for $678,000 in Jan 2020
    • 3.5% down payment FHA loan
    • Mortgage: $3950, rate: 2.875% 
    • Unit 1 rent: $1500 (studio)
    • Unit 2 rent: $2000 (2-bedroom)
    • Unit 3: vacant (will be moving in)
Thoughts on Investments
  • In a position of strength with high-paying job, so no need to build up a large reserve (has about $16k in reserves)
  • Overall FIRE plan: invest in 401k, some Vanguard funds, mostly saving for down payment for more properties
  • What’s next? Save money, invest in Vanguard stocks with surplus