The BEST Birthday Present EVER!

Posted on September 20, 2011 by

Financial FreedomToday is my beautiful redhead’s birthday.  She just turned something-something.  And you know what?  I love her more today than I have loved her all the other days we’ve been married – combined

A few months back, I racked my brain trying to figure out what to get Kim for her birthday.  Then it hit me…I’d give her the BEST birthday present she’s EVER gotten.  Of course, real estate was the catalyst for making this birthday wish come true.

Let’s go back to 2007.  Kim and I bought a beautiful four-bedroom, two-and-a-half-bathroom home in The Planters subdivision in Cartersville, Georgia.  Our purchase price was $14,298 (not a typo).  Since buying the home, we’ve kept it as an investment property.  Before expenses, this home earned us $14,400 a year in rental income.

Here’s the problem: This rental property doesn’t look like most of our other rental properties.  Our average bread-and-butter rental is a three-bedroom, two-bath, 1,500 square-foot home in a tool-belt neighborhood, and has one HVAC unit, a nice yard and rents for around $900 per month. 

The Planters house is much bigger and has two HVAC units.  This means the expenses associated with this rental – painting, insuring, repairing, recarpeting, etc. – are a lot higher than it is for one of our normal rentals.  Because of this, we made the decision to sell this property.

At first, for tax reasons, our plan was to do something called a 1031 Tax-Free Exchange, and exchange The Planters house for four bread-and-butter rental properties we had optioned from a regional bank. 

This was a very wise and safe deal structure.  But the thing that kept nagging at me was this: Kim and I have one big goal – to be debt-free.  If, instead of doing a 1031, we used the money from the sale of this property to pay off four private-money lenders, we’d be debt-free.  Problem was, we’d take a pretty big tax hit.

What to do?  We sold The Planters house on September 7th for $155,000.  I decided to use the proceeds to pay off our debt and go debt-free. 

Many would argue that this was, because of the tax hit, a stupid thing to do.  Perhaps – but how do you value the freedom and the inner peace that comes from knowing that you no longer owe anybody for anything?  (NOTE: We still have mortgages left on a few of our rental properties – but we consider that to be business debt.)

So, for Kim’s birthday, I gave her the best present she’s ever gotten.  I gave her financial freedom – or as Dave Ramsey says, “Financial Peace!”

If this is your goal, make the effort to learn about real estate investing.  It’s a hard profession to master.  It takes a lot of work, dedication, and sacrifice to succeed.  But know this – It’s soooo worth it!

Bill & Kim CookBill & Kim Cook are a husband and wife real estate investing team. They live in Adairsville, Georgia and have been investing in real estate since 1995. They specialize in buying single-family homes, mobile homes and mobile home parks. They also run North Georgia REIA and teach folks how to successfully invest in real estate.

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