How did we do our own monopoly project? How did we start investing in real estate and build our current holdings (two apartment complexes, two medical building and two SFH’s)? In this series we will trace the history of our real estate acquisitions.

Previously we described how we got started by buying our first SFH in 1999. What was our motivation?

In the first post of our “Start Your Own Monopoly Project – Step 1: Get In Shape”, we referenced Dave Ramsey’s “Baby Steps” to financial fitness. Step 5 according to Dave it to “Save for your children’s college fund.” That was also our motivation. In fact, that is why I disagree with Dave on steps 5, 6, 7 as stated in that post.

In Part 2, we explained our motivation and documented our initial baby step of buying our first rental house in 1999. By February of 2001 we had bought two more SFHs, and three triplexes: “Our Story – Part 3: We Start Buying Triplexes”.

In August 2001 we bought a fourplex and then another triplex in March 2002.

By the end of 2002, we had bought 3 SFHs, 3 triplexes and 1 fourplex:

In four years, we bought eight properties, composing 19 “doors”. Michelle managed all the properties herself including doing much of the basic repair work such as painting. For other repairs she hired various handyman type workers. At the same time we were raising three girls. Michelle turned the living room into Girl Scout cookie center:

And we had baby ducks among many other pets:

All grown up:

We also had a cat named Inky and a rat.

Were we making money? From our 2002 tax return above:

Income from rents (blue oval) was $134,298 with expenses (red oval) of $113,689 (including $70,706 of mortgage interest expense) and ‘depreciation’ (green rectangle) of $37,447 shows a loss (red heart) of $16,838. If you add (subtract?) the depreciation out, we made about $54K on a cash basis. And the ‘paper loss’ of $16K sheltered that much income from other sources. At a 33% marginal tax rate, that is another $5-6K for a total cash income of about $60K.

And the properties were appreciating. You can see this roughly in that Cab4 that we bought in March 2002 was $180K whereas the previous three (Dec2001 to Feb2002) were $140K.

Next (2003-2004) we buy another triplex, another fourplex, start an engineering company and buy an office building.