How We Turned Our First Real Estate Investment into a $150,000 Profit

When I graduated from college, I had one clear goal: to buy a multifamily property, live in one unit, and rent out the others. This strategy, known as house hacking, promised a way to reduce living expenses and build wealth simultaneously. But achieving this goal required discipline, sacrifice, and some calculated risks that would define my journey into real estate investing.

The Foundation: Hard Work and Aggressive Saving

My wife and I started our lives together in Denver, a notoriously expensive city. Despite this, we had a significant advantage: we were dual-income, no kids (DINKs). This allowed us to dedicate ourselves fully to saving for our future.

We were relentless. I worked overtime during my first year out of college, progressing quickly in my career, while my wife strategically changed jobs to secure raises. Our combined efforts significantly boosted our income, but we didn’t stop there.

We adopted a hyper-frugal lifestyle to save over half of our take-home pay. This meant:

• No vacations or unnecessary travel.

• No dining out unless we had coupons.

• Prepping every meal at home.

• Driving old, reliable cars instead of upgrading like many of our peers.

• Skipping alcohol and entertainment splurges.

• Watching $5 movies on Tuesday mornings and avoiding subscription services like cable.

Instead of feeling deprived, we focused on the benefits of our lifestyle: quality time together and the satisfaction of watching our savings grow. By the end of the year, we had saved over $40,000, setting the stage for our first investment.

The Search for the Perfect Property

Throughout this time, I was educating myself about real estate. I analyzed every small multifamily property in South Denver using BiggerPockets calculators, refining my understanding of what made a good deal. My goal was clear: find a property that would pay me to live in it. The Denver market in 2018 was highly competitive. I put out dozens of offers, often over asking price, only to face rejection after rejection. The process was grueling, but I remained focused, knowing that persistence was key. At one point, I went under contract on a 4-bedroom, 2-bathroom property with a carriage house. It seemed promising until the inspection revealed foundation cracks over an inch wide. The repair costs would have been astronomical, so I walked away.

The Breakthrough: Finding the Deal

After months of searching, a 4plex caught my attention. The property was listed for $750,000 and had tenants in place, though they were paying below-market rents and no utility fees. Here’s what I saw:

• Mortgage Payment: ~$3,300/month

• Current Rents: ~$5,200/month

• Potential Rents: Close to $6,000/month with minor upgrades and utility fees.

I immediately submitted an offer for $760,000. Unfortunately, the sellers accepted a higher offer of $775,000. Disappointed but undeterred, I moved on. Three weeks later, I received a call from the seller’s agent: the previous buyer had backed out. I didn’t hesitate and reaffirmed my interest. This time, I knew I had to act decisively.

Taking a Risk: Waiving the Inspection

In such a competitive market, I had to take a significant risk to secure the property: waiving the inspection contingency. The seller provided an inspection report from the previous buyer, which gave me some reassurance, but this decision was not without risk. To further strengthen my offer and avoid any negotiation headaches, I pre-negotiated a $10,000 seller credit upfront. This ensured there would be no back-and-forth about repairs or closing costs, allowing me to close the deal despite my tight budget.

Overcoming Financial Hurdles

Even with the seller credit, I faced another challenge: I had only $40,000 saved, and the 5% down payment program I was using required $38,000. This left me with little room for additional costs. The $10,000 credit covered closing costs and ensured I could afford to close on the property. At 24 years old, I became a landlord. I was nervous but excited, knowing this was the first step in building my real estate portfolio.

Learning on the Job: My First Year as a Landlord

Owning and managing the 4plex was a crash course in real estate investing. I quickly learned the ins and outs of property management:

• Maintenance and Repairs: From boiler issues to plumbing and electrical fixes, I tackled a range of problems.

• Tenant Management: I signed leases, collected rent, handled disputes, and conducted background checks on prospective tenants.

• Value-Add Strategies: My wife and I moved between units, making improvements like painting, refacing cabinets, upgrading flooring, and renovating bathrooms.

• Utility Fees: I implemented a Ratio Utility Billing System (RUBS), which increased cash flow significantly.

Living among my tenants had its challenges—it was awkward at times—but I made it a priority to address their needs quickly and professionally. This effort paid off, as they treated me and the property with respect. After a year, we started to see the results of our hard work. Rents were up, expenses were under control, and the property’s value had appreciated significantly. We began to ask ourselves: Should we sell?

Why We Chose to Sell

While the property was cash-flowing, we saw an opportunity to reinvest in something larger. The Denver market was still hot, and we believed the property had reached its peak potential. Selling wasn’t an easy decision, but we knew it was the right move for our long-term goals.

Reaping the Rewards

Thanks to the rental income, we eliminated our housing expenses and continued saving aggressively. Over time, we raised rents, improved the property, and increased its value. Two years after purchasing it, we listed the property as a turn-key investment, highlighting the improvements we’d made and the increased cash flow. Within weeks, we received multiple offers. In the end, we sold the property for $935,000—well above our $760,000 purchase price. After accounting for closing costs, fees, and initial investments, we walked away with a $150,000 profit. Beyond the financial gain, I had been "paid to live" in the property while gaining invaluable experience as a real estate investor.

Key Lessons Learned

Reflecting on this journey, several key takeaways stand out:

1. Hard Work and Discipline Pay Off: The sacrifices my wife and I made early on laid the foundation for our success.

2. Persistence is Essential: The competitive market was challenging, but my determination kept me going.

3. Calculated Risks Are Necessary: Waiving the inspection was a gamble, but it was a calculated one based on the information I had.

4. Preparation Meets Opportunity: Years of studying real estate allowed me to recognize a good deal when it came along and made our own luck.

5. Hands-On Experience is Invaluable: Managing the property myself taught me skills that would serve me well in future investments.

   
   

The Start of a Bigger Journey

This first property was a pivotal moment in my life. It wasn’t just an investment—it was a stepping stone to financial freedom. The challenges and lessons I faced during those two years prepared me for the next stage of my real estate journey.

If you’re considering your first real estate investment, remember this: success requires hard work, persistence, and a willingness to take calculated risks. It’s not always easy, but the rewards are well worth it. Today, I look back on this experience with gratitude. It wasn’t just the profit that made it worthwhile—it was the knowledge, growth, and confidence I gained along the way. This was the beginning of something much bigger. The $150,000 profit gave us the capital to pursue larger investments and the confidence to keep building our real estate portfolio.

Ready to Start Your Real Estate Journey?

If you’re considering getting into real estate, my advice is simple: Start where you are, focus on learning, and don’t be afraid to take calculated risks. The first deal is always the hardest, but it’s also the most rewarding. If you have questions or need guidance, I’d love to help. Reach out or leave a comment below—I’m here to support you on your path to financial independence.