FIRE
Case Study: REI in the Time of COVID

Case Study: REI in the Time of COVID

The Coronavirus Pandemic put more than a wrinkle in 2020. It put the economy at a standstill and created a mess of uncertainty. While it slowed real estate transactions, the demand for homes, whether to buy or rent, continues to remain strong. Properties are selling, people are buying and home continue to appreciate, or increase in value without actually having to update or improve a property.

The value of real estate investments, both as a source of income and stability, continues to shine through the insanity that has been 2020. 

A perfect example of someone realizing the benefits of real estate investing (REI) is my friend Jennifer Ward. I met her at a Meetup group she hosts called Long Distance Real Estate Investors. The first time I went, she commanded a group of 10 to 12 people in one corner of Zeppelin Station in Denver, CO. It was early 2019 and she was pregnant. That expecting mother glow was bright. 

I was excited to both be at the group and meet another mother in the REI realm. I couldn’t wait to talk to her after the meeting.

I found out Jennifer and her husband Justin “buy and hold” (purchase homes to rent) properties in Indianapolis, IN. They currently own three single family homes and one duplex for a total of five doors. They own their home and lease out their basement, also known as “househacking.” We’ll expand on that a little more in a minute.

Jennifer planned to pursue investing full-time once the profit from investments replaced her income. But with the baby on the way in 2019, she decided to leave her job working at a local university before she hit that goal to become a stay-at-home mom. She hoped to balance motherhood with real estate investing. Like many mothers realize, doing anything while having an infant or a small child is a challenge. However, Jennifer remained undaunted and took on a different investment strategy.

“I thought [being a stay-at-home mom] would allow more flexibility to take on a flip, which would help us acquire more cash to invest in buy and holds,” she said. “Even before having a child, we knew we wanted to retire early and live off our rental income. Having Zealand has just added to the eagerness to make this happen.” 

Jennifer has been exposed to the real estate world her whole life. Her late father was a custom home builder and her mom became a realtor later in her career. During Jennifer’s childhood, her parents bought properties to rent. They helped her purchase her first investment in Georgetown, TX in 2007. She planned to live in one side of the duplex, but wound up renting them both instead.

Shortly after their son was born, Jennifer and her husband purchased their first flip in Denver, which sold in the spring of 2020, just before her son’s first birthday and in the middle of the COVID-19 crisis. She is incredibly badass.

Jennifer with her son Zealand

A flip is a property that an investor will buy that is usually run down or in need of upgrades. The idea is to drive up the value (force appreciation) with improvements. Generally, this works when the cost of renovations combined with the price of property is less than the value of the home after those improvements. For example, if you buy a house for $100,000, put in $20,000 to renovate it and then sell it for $150,000, then you’ve made $30,000 by only spending $120,000. That would be about a 25% return on investment(ROI).

While the Coronavirus did not stop Jennifer from continuing her real estate investment goals, it still impacted her family. Justin was furloughed from his job at a hotel chain and they aren’t sure when he will be working again. They decided to take advantage of this time and go on a road trip to visit family around the country.  

They also decided to househack the rest of their primary residence. Househacking is when you rent out a room in your home to someone for either a few days, a few months, or long term. In other words, Jennifer now has her basement and the main living area of her home rented out.

Househacking, on top of their income from their other investment properties in Indiana, allows Jennifer and her family the freedom to travel as well as providing financial security despite Justin’s furlough. Her two tenants now pay her mortgage and create additional income that makes up for some lost due to the furlough.

“Thanks to our real estate investments, things have been fine,” Jennifer said at a recent get-together in a park, referring to her family’s ability to still cover expenses and sustain. “This is what real estate investing is supposed to do.”

Jennifer is currently working on two new projects – REI Mamas, a place for fellow mom entrepreneurs investing in real estate to support each other and collaborate and House Buying Mamas, a lead generating website of homeowners ready to sell in the Indianapolis area. Jennifer has goals to expand this site to other moms so they can generate leads for their market area.

INVESTOR MISFIRE: Let’s face it, Jennifer and her family are rocking it. While Jennifer had some family with real estate experience, it’s her drive to learn and apply her knowledge that is critical to her success in real estate investing. She has dabbled in buy and hold, house hacking and flips because she armed herself with information and established communities to support her along the way. Jennifer’s story shows how REI is pandemic- and recession-resistant.

You don’t need to have a background in finance, a real estate agent’s license or a management degree to be successful in REI. It’s all about diligence, responsibility, education and community. You’re not alone out there.

THE FAIL FORWARD: Educate yourself so you can learn what you need to know to invest in good deals and live the life that you want, no matter what the universe throws at you.


CONNECT WITH JENNIFER WARD

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