Why Louis Chose To Invest in a Rental Home Over Purchasing a Primary Residence in California

Our Doorvestors

Jun 27

Louis was first introduced to Doorvest by one of our team members. He enjoyed the concept of our product so much that he invested in Doorvest through WeFunder's Community Round. Louis recently moved out of the Bay Area to Davis, California, hoping to save for a primary residence. Now, working remotely as a Data Scientist at Socure, an identity fraud verification company, and living at his parents' in a lower-cost-of-living area, he has saved tremendously for a downpayment. Instead of using it for a primary home, he invested in a rental property through Doorvest.

Doorvest is built to advance financial security for all. We are ecstatic to see how a superfan turned into an investor, and now a customer and homeowner. Not only is this a testament to how much our investors 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 Louis below!

Why did you invest in real estate?

I've always wanted to invest in real estate just because it's always good to diversify your portfolio outside of just not stocks, cryptocurrency, ETF, or even your employer's 401K. Real estate investing also has a lot of tax advantages, especially in a high-income tax state like California.

Why did you choose to invest through Doorvest?

Working a full-time job and day trading, I was spending too much time and effort searching for the right market and a real estate agent that is knowledgeable and trustworthy within this market. I had to consider: what is my goal with real estate investing? Am I looking to buy a primary residence or looking to invest? How can I effectively communicate and trust the broker/agent to find what I am looking for? There was so much consideration that I lost the motivation to do this myself. Doorvest was the platform for me to get into the real estate investing space without too much effort.

How did you hear about Doorvest?

I was referred to Doorvest by a friend (a team member at the company) in late 2021. Doorvest was raising funds through WeFunder at the time, and since I like what Doorvest is doing, I invested some of my money into the company. From there, I learned more about the product, and one thing I love about the product is the UI of the Dashboard. I'm very analytical, so seeing how clearly everything is displayed and how nicely visualized the home performances and calculations were, it boosted my confidence and trust in Doorvest. It wasn't hard to convince me to submit a deposit and begin receiving exclusive homes that match my investment strategy - no matter how much it was - because the deposit is fully refundable if I didn't like what I received anyway.

How did you save for your downpayment?

I saved approximately 25% of the total cost of the property - that's around $60,000-70,000 of $255,000. I used the "pay yourself first" rule and saved paycheck by paycheck through my full-time salary. I would pay any credit card debt first, then put the rest into a 401K account (matched by my company), Roth IRA account, and savings accounts. I used an Amex high-yield savings account, which was 1% APY at the time. I also have a SoFi savings account because I used to work there, and I would split my cash savings between the two accounts.

My initial goal was to save $100,000-200,000 to buy a house in California. I would allocate more cash to my savings to achieve this goal. I'm not particularly eager to sell my shares to get cash because I will be taxed on a short-term capital gain.

How long did you save for a downpayment?

I was able to save pretty quickly. Despite my lifestyle of enjoying travel, it took me a year and a half to save roughly $70,000. This was made possible by moving out of the Bay Area and saving more than 50% of each paycheck.

From purchasing a primary home to investing in a rental property through Doorvest, what made you change your mind?

I initially wanted to save for a primary residence in California. I looked for homes in expensive areas like San Jose and Orange County, and the inventory there ran from a minimum of $800,000 to over a million. Saving $100,000 for a downpayment isn't the correct math here, but I wanted to build upon a downpayment to buy in California one day. Also, primary home or investment home - I do need a downpayment regardless to get the best rate.

I also didn't have enough time to search for a primary home actively. I also wanted to walk the property in person (whether in the Bay or LA); flying or driving for 7 hours from Davis was not worth my time. So I redirected.

I deployed my capital into an investment property. My goal with a Doorvest investment home is to build enough passive income and equity where I feel comfortable enough to purchase a primary residence in California.

What was your investment strategy for owning a Doorvest home?

I went for a balanced home. I wanted to net positive in cash flow and gain equity from the home appreciating over time. Also, the fact that Doorvest is in high-growth markets like Texas is a green flag for me.

I went for a single-family home with 3 bedrooms and 2 bathrooms as they are resilient to hold for the long run. The Doorvest Client Partners team also helped me define my preferences. As I couldn't inspect the homes myself, Michael from Client Partners, showed me what to look out for. For example, he pointed out the type of remodeling that was being done on my property and how having an extensive remodeling can limit my long-term repair costs. Despite the initial high construction cost, investing in high-quality fixes will minimize my maintenance cost in the long run.

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

How was your experience working with Doorvest?

Doorvest's customer service was excellent from the beginning to the end. The team was very friendly and knowledgeable, and they ensured that the customer understood every step of the application.

From helping me pick the lender to answer my emails even passed their working hours, the communication was always great, almost perfect. Michael also walked me through the inspection report and gave recommendations for the homeowner's insurance. In addition, he went above and beyond to help me understand how to calculate the property tax for my home and where to find the historical property tax.

Throughout this process, I always felt motivated and encouraged by the incentives that were given to me:

A friend referred me, so we both received a $500 Amazon gift card upon closing.
I benefited from the promotion at the time and got the management fees waived.
On top of that, I get a one-year rental income and maintenance guaranteed. This is a no-brainer.

After closing my home, the success team kept me updated on the day-to-day operations. For example, I get notifications and emails about when my rent is paid and what I should expect every month. I can also find this information in my Client Doorvest Portal. The UI here is something that caught my eyes from the beginning. The user experience of the Portal is excellent and very user-friendly, and I love how it documents all of the activities in my home. Looking at the Portal gets me excited every time.

How is your investment property going?

My home closed a few weeks ago in May 2022 for $255,000. On Zillow as of June 14, 2022, it is now worth $275,000. Every platform has a different way of estimating value, so with a standard error, on average, the home went up by $5,000 since purchased. This is great for me, especially with rising interest rates and inflation extremely high. My mortgage rate is 5.25%, and I got this without any points (meaning I didn't have to pay extra origination costs to get the lower interest rate with points).

Anything else you would like to share?

My suggestion for newcomers is to invest in real estate as soon as possible:

One of the critical components of owning real estate is the tax advantages. This is especially valuable for individuals living in California or areas with a high state income tax.
It's always great to have positive, reliable cash flow every month.
If you could get a low mortgage rate, then absolutely buy now. It's crazy how the market has moved if you look at how it was 30 years ago. If you had invested in a rental home, you would be sitting on a large amount of equity today. I wished I started sooner and even wished Doorvest was around when I was in college.
If you're looking to own real estate remotely without requiring too much time and effort, Doorvest is a much more convenient route that'll match your busy schedule. You don't have to travel to visit your property in person. You don't have to search for a market and find a real estate agent within your chosen market. You don't have to enter a bidding war because what you see on the Doorvest Home Profile is what you will most likely get (this varies depending on the renovation costs, but you don't have to bid against others and hike up your purchasing price). When working with Doorvest, the Client Partners walk you through the entire process like you would working with an agent. Except, you get the best of both worlds - own real estate without the work, be more knowledgeable about the space, and be fully equipped to scale your real estate portfolio.