- Seth Jones had a rule for real estate investment: Home rent for 1% or more of their value.
- He sold his 10 properties and put the money in a portfolio of the fund traded from the exchange.
- Jones says life is easier without headaches that come with property management.
This is such a strong essay, based on a conversation with Seth Jones, 36, who lives in Port Orange, Florida, about 20 minutes south of the Daytona Beach. Jones began buying investment properties in 2015 and then began selling them in 2020 to set his money elsewhere. The conversation is edited for length and clarity.
When I was younger, I read books like “Wealthy Dad, Poor Father” and “Investor of Real Estate Millionaire”. That’s all I wanted to do.
When I left the military at 22, the first thing I did was get a job as a real estate agent because I thought it would help me become an investor.
My wife and I moved to Port Orange, Florida, in 2013 to be closer to her parents. I realized soon Florida was saturated with agents. Even then, there were only a small number of really good mortgage intermediaries. So I headed.
Some time passed because I had to develop the right credentials. I became a personal banker with a regional bank and worked there for about a year and a half. Eventually, I became the branch manager. All the time, I was working on my licensing to become a mortgage intermediary.
For years, my wife and I were focused on saving money. My wife is a teacher and we have lived only from her salary. All my income went to save to buy properties. We hardly ever eaten and never went to bars. My faith is really important to me, so I spent a lot of time about people in the church, which made it easier. Many people in the church live quite simply, so we didn’t do much social or wise things.
The goal was to reach 100 doors. That was all my focus. I just wanted to build a real estate business that would eventually support me and my family, and I wanted to do it as soon as possible.
I didn’t buy my first property until 2014. They were actually two, each with three bedrooms below $ 60,000. I have been able to pay 15% down.
I created a rule to lead my real estate investment strategy
I am very conservative by nature. Basics based have always been important.
It has been disappointing for me that after 2008, many people developed an opinion that real estate simply do not go down.
I have developed a rule as a mortgage mediator that often call the rule 1%. A very simple mathematics, back-to-napkin. When I look at a property, the first thing I am looking for is whether the monthly rent I can charge for it is greater than 1% of the home value. So on a $ 100,000 property, am I able to rent for $ 1,000 a month? On a $ 200,000 dollars, am I able to rent for $ 2,000 a month?
Is not Ironclad and not always makes or disrupts a purchase. But I use it as a guide and for a quick analysis of a deal.
After the first two properties, I managed to grow quite quickly. In 2018, I opened my first mortgage brokerage, which increased my income and gave us more resources to invest with it. By 2019, I was able to target the highest quality properties in high school districts.
My 10th and last purchase was a property in Lexington, South Carolina, which I bought for $ 138,000 in February 2020. Up to that point, I had realized that I had focused all my risk in Florida. I began to worry about the impacts of a big hurricane and I wanted to diversify my portfolio overseas.
Doing my research, West South Carolina seemed sufficiently isolated from national disasters, and found a good school circle in Lexington.
I ended up with a portfolio with 10 property.
Covid real estate boom disturbed me and I went out
In the world of real estate investment, everyone talked about the flow of money.
Formerly around 2019, I noticed a change in focus. I listen to a lot of financial podcast, and I heard everyone’s concentration differ from the flow of money -oriented money -oriented. This is never how I have looked at the signature deals.
At the beginning of Covid, I predicted that property values would be stressed and potentially deducted. Of course, the opposite happened.
I saw things removed. I was not sure what would happen by moving forward, but the bases began to change. I have used Rententure, a real estate data collector, quite widely. It attracts data from many different sources, and I would trace the rental price reports for the local market.
For property values, I have used every site on the Internet, but I prefer Redfin. It seems to me to be the most accurate, and I like the feature where you can see comparable sales.
I sold two properties in 2019, three in 2020, three in 2021, one in 2022, and one in 2023. The biggest rating was a home I bought for the $ 190,000 I was able to sell for $ 500,000.
I placed all our resources in fluid assets-a varied portfolio, with many assets traded with fundamental shares (SCHD), Gold (IAU), Long-term Treasures (SCHQ) and short-term treasures (SCHO).
I have no remorse and I think I will be justified after we have some kind of correction.
I have people who tell me I am an idiot for selling my properties. They think they could have done 10 times what I did in real estate.
I think that real estate is a great tool for building wealth, but it is also true that the basics matter. There is a significant change in my space that comes from not keeping real estate. From the point of view of the obligation, I have no external concerns. No one will be hurt. I’m not dealing with late night phone calls.
There is still stress in trading shares and net capital. You don’t see a marker in a house that goes up and down all the time, but life is simpler.