How Justin Instantly Gained $3,200 In Equity From His Rental Home

Our Doorvestors

May 31

Justin was first introduced to Doorvest by his cousin. He followed Doorvest blogs for a few months before cold-emailing Andrew, CEO & Co-Founder of Doorvest, in his junior year of college - asking for a job. Justin applied for every role available at the company but got no hits. Eventually, Doorvest offered him a freelance writing job, which developed into an internship opportunity and a full-time position. Now, Justin is "still chipping away" as a full-time Product Manager here at Doorvest.

Doorvest is built to advance financial security for all through single-family rentals. We are ecstatic to see that many of our Vesties (what we call our team members), including Justin, are beginning their journey to financial freedom through Doorvest. Not only is this a testament to how much our Vesties believe in our product, but every day where we can help someone have direct ownership of an investment home is a day we get closer to democratizing financial security for all.

Enjoy our complete interview with Justin below!

Why did you want to invest in real estate?

I wanted to invest in real estate mainly to test the waters with other investments. I am big into stocks, options, and derivatives. About 90% of my net worth is in an ETF diversified portfolio.

The most exciting aspect was that real estate could generate not only the levered return but can also often generate more income than dividend stocks. A dividend portfolio can generate ~4% on average in dividends alone. On the other hand, real estate can generate upwards of 10% in cash-on-cash. DIYing real estate can often yield upwards of 20% cash-on-cash due to the uplift of doing renovations on your own. These numbers sparked my interest since it would outperform an early retirement, dividend stock-based portfolio (not even including appreciation or equity).

How much did you save for the down payment?

My downpayment came down to $30K. I also saved an additional $6K for closing costs.

How did you save for the down payment?

As stocks are a big part of my portfolio, I am a big proponent of rebalancing my portfolio annually. This means either selling stocks or buying stocks in less concentrated areas dependent on the stock performance of that year.

With the performance of tech stocks during the pandemic, I felt it was a good time to rebalance my portfolio by selling, which funded most of my downpayment.

The interesting question becomes, "where did the money come from to buy stocks in the first place?" I have a unique situation where I came out of college with a surplus instead of a deficit.

By working as a Resident Advisor in college, I saved on my housing and food expenses, making college free due to scholarships and grants. This gave me the initial ~$10K during college to begin stock investing earlier than others. This ~$10K grew upwards of 200% post-graduation, covering the downpayment itself.

While my situation is probably more niche, I believe that others can achieve a similar effect with side hustles or additional freelance work on the side. $10K broken down in a year by working days is only $40/day you would need to generate, which I feel is an attainable goal with many freelancing gigs.

Why did you decide to invest in real estate through Doorvest?

I live in California and cannot afford viable rental properties here. To top that, rental properties in California often do not have the cash-on-cash I was looking for. This meant out-of-state investing would work better for me, but I was uncomfortable with the idea as a first-time investment homebuyer.
Working for a startup is a full-time job. I found it incredibly difficult to source deals, find general contractors, get the money to renovate and find a resident for the home. With little bandwidth and time, this was very challenging, let alone doing it in another state.
I saw firsthand the property management service Doorvest provides from an internal employee perspective, and quite frankly, I am impressed. I felt that I could trust the Doorvest team to own property management and make it frictionless for me.
Full disclosure, as a Doorvest employee, the employee benefit for buying a home through Doorvest is getting 0.75% of the purchase price amount back into our pocket.
Selfishly, I wanted to be the Product Manager who actually uses the product so that I could relate to customers, understand the pain points of the current process, and iterate on the product itself from the inside.

How was your experience working with Doorvest?

I detailed my entire Doorvest journey, from putting down my deposit to becoming a homeowner on the Doorvest Community Group on Facebook. Here are the highlights:

After submitting a fully refundable deposit, I received many home profiles and instantly reserved the one that best fit my investment criteria. The home is in a B neighborhood with fantastic cash flow (10%+ cash-on-cash with 20% down). The expected renovation is $32K, covering significant components such as roof repairs, new HVAC and furnace, flooring, etc.
A Doorvest Client Partner reached out and gave me action items for the next step: Get a pre-approval letter from my lender of choice. I also received recommended lenders often used by other Doorvest customers.
I got my pre-approval in 7 days, and the Client Partner connected me to a Closing team member to assist in drafting the purchasing agreement.
I signed final documents, wired money to an escrow account, and closed on my first rental home! It was slightly stressful, but I cannot imagine the additional stress without Doorvest's assistance.
A resident was placed in my home 5 days after closing. And now, the Doorvest Success team manages day-to-day operations so I can be as hands-off as possible.

I prefer to keep the address private but happy to share what my Doorvest rental home, post-renovation, looks like:

How is your investment going?

I closed a little over a month ago on my property, so I don't have a lot of concrete details on the appreciation aspect. However, the comps in my area have gone up, and I have received data from a few companies indicating a roughly 6-10% increase in value since (likely due to excellent renovation work done by the team).

My appraisal began at $3,200 over my purchase price. This meant I instantly gained $3200 in equity on top of my 20% down payment, which was a nice unexpected icing on the cake.

Finally, cash flow. Cash flow is nice, but it's not a game-changer. It's a couple of hundred dollars a month, but I don't count it as I leave it in savings for the rainy day fund for the home. I imagine I will see a more significant difference at a multi-home scale where cash flow could become a substantial part of my monthly income. But for now, it's just a nice bonus for the home's savings account.

What other investments have you made over the last 5 years?

90% of my investments are in index ETFs using the Swensen Portfolio Model as the baseline. The other 10% is my "risk-loving" portion, individual stocks, swing trades, derivatives, and options.

Anything else you would like to share?

There's a "charm" to Doorvest's product and service. And that charm is the value of direct, 100% homeownership. In America, being a homeowner has always been a pinnacle part of the American dream. Even though I am not living in it, I am still proud to call myself a homeowner. I also plan to own many more homes in the next few years. And you can't find that "charm" combined with all the other benefits mentioned anywhere else.