New Real Estate Adventure on Our Way to FI

Updated: Mar 4, 2021

In February 2020, I changed jobs and joined my husband in the fully remote working world. We lived in a 3-bedroom house, and we used those 3 bedrooms as follows: master, spare bedroom, and office. Historically, we’d been able to share an office because neither of us was working from home all the time. With my job change, we knew we’d need two offices to keep our marriage intact. Unfortunately, our second and third bedrooms were both too small to house both a workspace and a guest space, so we had two options: have no guest space at all or start looking for a new place to live.

At first, my husband protested. Then, he joined in my thinking: other than two offices and a guest space, what would we want in a different home? On days we were both at home, we would immediately want to get out of the house at 5:00. This would usually mean going out to eat, for a walk, or for a bike ride. We had originally loved the location of our home, with equal commutes to downtown St. Petersburg and Tampa. Now working from home, the location didn’t have the allure it once did. Often, we would end up on the busy road near our house during rush hour. We added other criteria to our wish list: walkability and access to bike trails.

My husband and I have both written and spoken about our real estate journey. We are low-level real estate investors. When we were considering a move, we owned our primary residence and a duplex, which we rented out. One thing we’ve learned is it’s hard to buy an investment property by financing it in this area. We made at least a dozen offers including financing before we finally had enough cash saved to buy the duplex outright. What if we were able to buy a primary residence with a conventional mortgage that had a rental unit on the property? We would be able to kill two birds with one stone: move into a new place that worked for us and finance rental income to help pay the mortgage. We were paying $2100 per month to live in our house. That’s over $25,000 per year. If we could offset that a bit, we would reach our financial goal of retiring around age 40 more quickly.

We focused on location first, knowing we could look for a larger place with a rental option once we found a town with walkability and bike trails. We mostly considered small towns in our county with cute downtowns and bike trails: Safety Harbor, Dunedin, and Tarpon Springs. None of these towns were as ideal for a commute as our current neighborhood, but they were all within 45 minutes of Tampa International Airport, which we would need for work and personal trips. We biked, walked, and went out to each multiple times in each town.

Eventually, we decided on Tarpon Springs. The Pinellas trail runs right through it, which is a 46-mile paved bike trail. It has a tourist destination in the Sponge Docks, including a handful of restaurants on the water. It has two beaches and many waterways. It has a separate downtown area. The prices are very reasonable, potentially because it is basically as north as you and be in Pinellas county, which is about a 40-minute drive from the county’s biggest city, St. Petersburg. Dunedin and Safety Harbor have experienced significant appreciation in recent years, why wouldn’t Tarpon Springs be next? And even if the town didn’t experience a lot of appreciation in home values, we could still decrease our payment and add a rental unit.

We started looking at homes in February 2020, and there were two properties that matched our criteria: walking distance to entertainment, access to the Pinellas trail, enough room for two offices and a guest space, and rental income potential. Valentine’s weekend we booked two nights at the Tarpon Inn, so we could make sure we truly liked the area.

We looked at the first property on Saturday. It had two lots, with a 4/2 home with a pool (built in 1910), a pool house, and a 3-car garage with an above-garage 2/1 apartment. It was located very close to a bayou, thus requiring flood insurance. The list price was $569,000.

We looked at a second property on Sunday. It was run as a Bed & Breakfast. The main home (built in 1901) was a 3/2.5, with the second bedroom being large enough for a full office and full guest space. It had two small rental units in the back and a place to hook up a trailer. It was a single, small lot, and was listed at $336,000.

I wanted the second one, and my husband wanted the first one. So, we went under contract on the first property for $542,000. Eventually, we came to our senses and realized that was too much to spend and we would be working and generating rental income just to pay the bills. For more information on that, please read or listen to Real Estate Deal Gone Bad.

After a slight cooling off period in the middle of the Covid-19 lockdown, I approached my husband to talk about the potential financials of the Bed & Breakfast:

  • Payment $1750

  • $300,000 purchase price

  • 20% down

  • 3.75% interest

  • Vacation Rental Income $2100

  • Cottage A: 50% vacancy at $60/night: $900

  • Cottage B: 50% vacancy at $40/night: $600

  • Travel trailer: 50% vacancy at $40/night: $600

Once he saw the numbers, he came around. Rather than explaining every single step in this process, here’s a timeline of events. As one of my favorite podcasts likes to say, hold onto your butts. It’s a doozy.

  • August 22, 2019: Property listed for sale for $374,900 on income section of MLS, but not on Zillow or anywhere online.

  • Price changes between listing and when we looked at the property:

  • Price change to $364,900.

  • Price change to $349,900.

  • Price change to $336,900.

  • February 16, 2020 (Valentine’s Day weekend): We looked at the property for the first time.

  • Late February 2020: We went under contract on another property in the area, and eventually opted out. (Again, please see Real Estate Deal Gone Bad.)

  • March 4-13: We started negotiations on the Bed & Breakfast.

  • Offered $300,000 (see numbers above)

  • Seller countered at $330,000