Buy and Hold Stories: 1st Property

Butte, Montana: Buy and Hold Stories:

My husband and I began buying and holding properties in Uptown Butte, Montana in 2010 after listening to Rich Dad/Poor Dad over and over. We’d listen in the car, on the bike trainers, before bed. At the time, we had 3 small children in a town far from family. We did have good jobs and a solid house. The feeling of financial fragility was real to us and we needed a plan.

We started looking in out market. The real estate bubble didn’t happen in Butte so, when the crash happened we learned about it from the media and not first hand. Our real estate market is not for speculators (despite the mining history), we decided it is for long term strategists. Market stability is good for buy and hold of residential properties.

To get started, we had 401k savings, equity in our home and had kept expenses down by deferring new cars, shopping at Goodwill, and staying healthy. We raised our kids the way our neighbors, kids now grown, said they did: hiking, camping, skiing, swimming, picnics, long drives, walks around the neighborhood. Montana lends itself to this life and it can be super affordable if you don’t care what you look like while “doing it all”.

We were positioned to launch our plan to buy and hold income property in our town. We formed our company: Blacksteer Canyon Properties, LLC.

 

First Property:

Simple in hindsight, we bought a duplex. Here is the “offer to closing” story.

The historic side-by side was previously owned by a Kalispell contractor wanting his Montana Tech children to have a place while attending Tech.  The grown kids were apartment hacking with roommates covering costs, they just wanted to sell and move on with their careers. We needed the property to cash flow from the start with projected repairs planned on this 100 year old building built into that calculation. As part of the purchase, we asked that money be left on the table for a roof that the seller would put on.

Before signing, the roof was to go on. My husband and I would nervously and happily drive by the very difficult roof installation with steep pitches and multiple lines. Roof half on half off, with tarping flapping, a huge rain surprised the installers. Water ran down the inner walls. Oh, yes it did…

Happily, sellers paid for the drying out and drywall work; we had the ability to upgrade the electrical system in the newly opened walls.

The deal closed after another inspection showed work had been completed.

This duplex has rented above the projected numbers we built our purchase numbers on. We have been able to do upgrades to the bathrooms and floors over the years. I enjoy biking by it on my way to work knowing it is “passive income” on my way to my “active income”.

 

Lessons learned:

  • Starting is the best way to get started.
  • Get the name of contractors doing work paid for by seller and dibs on a warranty if you can (we did not).
  • Have cash reserve for fixes that may come up even before you close i.e. electrical updates during an unexpected drywall opportunity.

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