A single Millennial on the path to Financial Independence

By Josh August 9, 2018 (Warning, post is over 3,600 words)

Sometimes, I feel like a broken record. Pause that, rewind a bit…

As a total FIRE enthusiast and fledgling member of the PF blogging world, I am a member of several private Facebook groups and regularly chime in on posts where overly-excited real estate investors/hopefuls talk about the can’t-lose opportunities available only through real estate investment. They spew crap like “only 3% down and then someone else pays off your mortgage for the next 15 or 30 years” OR the infamous “the house will appreciate, so I can sell it in a few years and pocket the difference.” Inevitably, I have to post a quick paragraph about my own “can’t lose” opportunity that blew up in my face shortly after buying in 2006, and which I am still working on recovering from to this day…

Here’s that story:
I graduated from college in the Midwest, and quickly moved to Southwest Florida to start my career in Urban Planning. I just “knew” that working in local government and knowing about all of the development approvals that were in the pipeline would help me select the perfect house, in the perfect up-and-coming neighborhood, with plenty of upside potential that just about every Joe Schmoe on the street would have no idea was just around the corner. Like most people starting out, I got my first apartment and took in a roommate that I knew from the prior summer when we were both summer interns for the same office that I would work for again in my first big-boy job. As most of you know, “knowing” someone and living with them are two totally different things. I’d had some bad roommates in college, but this guy was the worst of the worst. Because this is a money blog, I’ll just share that he never once paid his share of our common bills on time, and by the time I left, he still owed me a sum of more than $700 (it had been nearly $2,000 at the high point). So I was in a hurry to get out of that living arrangement and buy something of my own.

Luckily for me, the father-in-law of one of my co-workers was a real estate agent. He was a nice guy, but I felt like he was pretty lazy in trying to help me find something in my budget. We looked at a few condos in old-people golfing communities, but I didn’t want to live on top of someone or have someone else live on top of me, so those were nixed pretty quickly. There was one townhouse complex that was promising, except that it listed 2 bathrooms, which was *technically* true, if you didn’t mind the two bathrooms being joined by a common bathtub! (I swear I’m not making that up!!)

My mom spent most of her free time perusing the internet, and would send me promising listings to check out from the County’s planning and zoning perspective. Finally, she found a newly-renovated 2 bedroom, 2.5 bathroom townhouse in a golf course development. The course had recently been shut down to be the centerpiece of a major redevelopment project: Par-72 championship golf course, three 30-story condo towers, enhanced marina, bowling alley, restaurants, retail, office, etc. The townhouse backed up to the woods, which were slated to remain as a preserved open space piece for the overall development. This was the end-unit of the 10-unit townhouse, so it would feel like a duplex, since I would only share 1 wall with my neighbor. After researching the neighborhood redevelopment plans, I saw dollar signs. This was an opportunity to get in on the ground floor of a HUGE up-and-coming part of the area, only a 10-minute drive to Downtown Fort Myers, and situated in the unincorporated part of the County, which meant lower property taxes than nearby cities, and lower water & sewer bills, too. I jumped at the opportunity!

All was well for a while after I moved in back in April 2006. The housing market was softening, but I bought my place for $10,000 below the appraised value, so I felt like I had $10k in equity from Day 1. Unfortunately, I didn’t realize I would have less and less equity every day for the next 4 years. The overall economy in Southwest Florida is based upon two things: Tourism & Construction. Being highly-leveraged against any two industries is a precarious situation, but those two in particular are VERY cyclical and the inevitable bust came and absolutely crushed this area. By January 2008, my office had already seen such a slowdown that it became necessary to start laying off approximately 30 people at a time, from a high of 400-ish employees, so that’s 7.5% at the beginning. As the local economy took a beating, layoffs were happening all over, and people were starting to really hurt. The excesses of The Boom (HELOCs to buy fancy cars, boats, jewelry, vacations) were coming back with a vengeance, and people started losing their homes to foreclosure. Lee County Florida was #1 or #2 in the Nation for foreclosures for several years, going back and forth with Las Vegas Nevada.

Due to the pain in the economy, some people started getting desperate. Residential burglaries were on the rise, and I became a victim of a group of burglars on a Tuesday morning in August (in broad daylight). They stole my 50″ DLP TV (this was 2008, mind you), my Playstation 2 and all of the games, DVD player, sodas and alcohol, basically anything of value in my house. They put the chain-type lock on the front door and escaped out the back, leaving the back slider wide open and the A/C blasting all day, just wasting electricity on top of having robbed me blind.

I came home from work, but not until after stopping at the grocery store because it was on my way home. I pulled up and noticed something didn’t seem right, because the vertical blinds were flipped the opposite way from normal, indicating someone was trying to look out, and then I tried the front door and found the chain would not allow me entry into my own house. I dropped all of my groceries on the ground and ran to the back door, when an empty feeling in my gut… I knew something very bad had gone on inside.

I called the Sheriff’s office, and more than an hour later a dopey, young deputy arrived. He took my statement and a couple pictures, spread the fingerprinting dust all over the place and stuck clear packaging tape on anyplace he thought he saw fingerprints. Talk about a waste of time and causing another big mess!

Nothing was ever retrieved, the authorities had no leads, and I was only partly made-whole by the insurance company. Unfortunately, I had only recently increased my homeowners insurance deductible from $1,000 to $2,500 on my home that was now assessed for $47,210, so I got a check for around $8k, when I had lost over $10k in valuables (to a 25 year-old guy).

For YEARS after that break-in, which happened 10 years ago this week (8/5/2008), I would walk through my front door every day and think “what did they take this time?” even though no burglars have ever come back. I had a fright this afternoon when I walked home and saw the kitchen lights turned on, but apparently I forgot to turn them off in the morning, which I NEVER do… crisis averted.

But burglaries happen, and I’m not unique in that circumstance. The next thing to happen was my job was no longer safe, and by July 1, 2009, I was let-go from my first job. But since my degree and all of my relevant experience was in City Planning, and there were no jobs available in my field, I had to pack up and head back to the Midwest, where I at least had some hope of finding a job. I knew that I could either stay with my parents or rent a room from my sister, who had bought a house with her then-fiance just a couple months after I lost my job. But for 7 months, I searched and searched, and did not find any employer willing to hire me because they didn’t think my Florida experience was going to be very helpful for planning in Indiana or Ohio.

Then, by stroke of luck, I ran into a man I used to know through the local skating rink. He and his wife actually owned the skating rink, and I was pretty much a “rink rat” growing up, since it was a whopping 1/4 mile from my parents house, I would go there all the time. Well he was no longer the skating rink owner, but he owned a business in the neighboring town that worked on Grants administration for small communities and small companies all around the state of Indiana. He was looking for someone with a good head on their shoulders, an eye for attention to detail, and willing to help relieve some of the less-technical workload off of his plate so he could maintain quality work for his customers. The job would only pay $11/hour, but that was more than unemployment was paying me, and I had a 4-digit per month mortgage to pay on a house in Florida that I wasn’t even able to live in anymore.

Luckily, living with mom and dad wasn’t so bad, and we knew this would all be temporary. Of course temporary just means “not permanent” and neither was this job. As time went on, the Grants administration world grew very competitive, fighting over every last dollar of Stimulus money and FEMA disaster recovery money that was announced. Applications were flying in from all corners of the state, and fewer and fewer of our applications actually got funded. We worked on a commission basis, so if the projects didn’t get funded, we didn’t get paid! That doesn’t work well for very long, so my stint was up after 18 months and I found myself back in unemployment.

After a few months of searching, with no luck, I encouraged my parents to take a vacation down to Florida to check on my house, pack up a few things that I thought maybe I needed if I was going to stay in Indiana for quite a while, and just have a relaxing week in Florida as the weather started to get cooler in the Fall. I sent an email to one of my old co-workers to see if they still had their old standing lunch plans at a favorite sandwich shop on Thursdays at noon. It turns out, they did, and he was happy to hear I was in town and wanted to catch up with some of the guys. After lunch, he invited me back into the old office to say hello to everyone that remained, and I took him up on that offer, even though I was still quite upset with some people for the way it all had ended. (They accused me of day-trading and “excessive use of internet” so they could fire me instead of a lay-off).

The tour of the office was complete with the awkwardness that you could imagine after nearly 2.5 years away from the place that fired me without cause. But it was nice to see some familiar faces, and I even had one big surprise. The big boss lady (Director of the whole Department) came running out of her office with a printout of a job description and she exclaimed “Josh! Josh! You have to apply for this job!” It definitely caught me by surprise, because I never thought she liked me. Turns out, the job was pretty much the same one I had previously held at the County, but for a local small Town that we used to serve when I was working at the County. I went down to the small local government building the next day and applied on the spot, during my vacation.

I went back to Indiana, with only a glimmer of hope that this job might actually come through for me. I already knew the area, knew the Town’s Land Development Code, and knew a couple of the people I might be working with, but I knew things were still pretty tough for City Planners in the area, and there might be more-qualified people than me applying for the job. I did get a phone interview (which was nice for them to arrange, since I was 1,100 miles away), but I didn’t hear anything for more than 5 weeks after the interview. I reached out to my contact in the department, and she had a talk with the Director. He called and asked if I could come back for a second interview, which was tough to arrange since I was the aforementioned 1,100 miles away. But the call was on a Monday, and I asked him to give me Tuesday to pack, Wednesday and Thursday to drive down, and I would show up Friday afternoon for a face-to-face interview. The interview went OK, but the Director knew he had me backed into a corner, so he low-balled me an offer more than 10% lower than we had previously discussed, and I accepted the job on the spot.

For weeks before this job offer came through, I had contemplated walking away from my house and letting the credit union foreclose on me. I didn’t think there was any chance in the world of me getting another job in my field in Fort Myers, and suddenly I was back and would be working in a beach community that my family used to visit for Spring Break nearly every year since I was in 5th grade. It was only because of my house that I was even coming back to Fort Myers for that vacation to begin with, and it led me to the lunch, with led me to the job posting, which led me to the job offer. Things were starting to turn around!

…Except for the value of my home. This was late 2011, more than 5.5 years after I bought it, and the assessed value was down to $27,841. That’s all well and good when the property tax bill comes, but it’s really terrible when you paid nearly 7 times that much to buy it, and are 6-figures underwater on your mortgage. At this point, the golf course was not in playing shape for more than 6 years, and the promising development had been held up by FAA permits for the aforementioned 30-story condo towers that were directly in the flight path of the local municipal airport ALTERNATE runway. The developers eventually lost the property back to the bank for a $94 million foreclosure, and all of us neighbors were left living on an overgrown critter haven instead of a lush golf course with attendant high-end amenities that we expected.

One day a couple years later, I received a phone call from my uncle, who is a barber in Central Florida. Since he is a barber, he always has the TV turned on and he overheard a news story about a grant program that the Florida Department of Housing was offering to distressed homeowners that had not previously been eligible for the federal relief programs such as HARP and HAMP. The rules were pretty strict, but it sounded like I might be the perfect candidate, which would award me a $50,000 grant to be paid directly towards the principal on my mortgage, to help reduce my monthly mortgage payments and help me get back on my feet faster from the housing debacle. It was called the Florida Hardest Hit Fund – Principal Reduction Program. Sounds good to me, so I raced to complete my paperwork.

The terms of the program are blurry in my head, but were something along the lines of: had to have purchased before 2008, be your primary residence, had to have never had a late or missing mortgage payment, and had to make less than 140% of the area median wage. Finally, I had a reason to be thankful for being a low-paid government employee, and I could use my new Grant application skills for personal gain! As soon as the grant application window opened, I submitted my completed application on the first try, and the attorney in charge of processing the applications commended me on the excellent work I put into preparing the paperwork. There was a monetary limit of around $300M on the amount in grants that would be awarded, but the earliest applicants were going to have first crack at the upper limit of $50,000 each to be considered a $10,000 per year forgivable loan. I was awarded the full $50k, which went straight to my mortgage company. They then “recast” my loan, meaning my monthly mortgage payments went down, by nearly $350 per month! I would be saving a couple hundred a month in interest payments, but also paying less towards the principal for the rest of the loan. If I sold my house in the intervening 5 years, I would owe a pro-rated amount back to the Florida Department of Housing, $10k for each year remaining on the original 5-year window. At the time of this writing, I am 6 months away from having the full $50,000 forgiven, and then I don’t have to worry about any kind of potential claw-back of that money.

In February of 2016, which is supposed to be our DRY season in Southwest Florida, we had some heavy rains that caused a weak spot in my roof to collapse through to the floor of my spare bedroom closet. It caused quite a mess, and I hope to get a couple pictures posted below, but they are disgusting. Luckily, the Property Owners Association takes care of exterior maintenance, but I was responsible for the indoor repairs to the closet ceiling, carpet and shelving.

Since I live in Southwest Florida, every summer I have the great fear of having a hurricane or tropical storm damage my house. Unfortunately, due to its age (constructed in 1981), it does not meet the more stringent Florida Building Code standards that were enacted in the early 1990s after Hurricane Andrew decimated Homestead (Miami) in August 1992. We have really only had 1 close-call in this area since I bought in April 2006, and that was Hurricane Irma in September 2017, which set a record as the longest-lived Category 5 hurricane in Atlantic Basin history, before making landfall in the Florida Keys and taking a swipe South-to-North through the Florida peninsula. Fortunately, the track of the storm was east of my area, which meant that my community was on the “weak” side of the storm. My house was spared of the 15-foot storm surge that was predicted with a more westerly track, and the home itself faced no wind damage from the North-to-South winds on the west side of the storm. The only major loss we faced was our community apartment-style mailbox was knocked down, landing in my parking spot, had I not moved into a job in Emergency Management that required that I be stationed in an Emergency Operations Center for the duration of the storm event (and several days before and after).

The only other major debacle I have faced with this house is a recurring infestation of bees! Over 10,000 bees have been found in my attic on multiple occasions over the past 12 years. We have tried multiple “professionals” to try and fix the problem; everything from beekeepers, to pest control and exterminators, but apparently they never get the Queen, and the worker bees always come back. I went up into the attic one time to find the hive had become a swirling vortex of bees, tucked up into the soffit and measuring at least 8 feet long! This is not going to be an easy problem to fix, and it is still ongoing at this time.

For all of the reasons listed through this rambling story, between all of the things that can go wrong, and even the things that went right because my journey through life prepared me for future steps, I still consider this the worst investment of my life. I paid $175,000 for this 1,260 square foot townhouse (1,180 under air conditioning), and Zillow says it is worth $128,082 today. So I have lived in this house for the better part of 12.5 years (for this purpose I am including the 2.5 years I moved back to Indiana but was still making mortgage payments), was GIVEN $50,000 (which technically brings my purchase price down to $125,000), and I have BARELY BROKEN EVEN in 1.25 decades of home ownership! This stuff is not for the faint of heart, or for uninformed young investors looking to make a quick buck.

Things appear to be looking up again, with a new developer involved with the golf course/marina project from 12 years ago. This time, the plans call for the woods behind my house to be removed and the golf course re-configured to bring the golf course right behind my house. Instead of being across the street from the golf course, my house will be on Hole #1, near the tee box of Hole #2. The project is planned to have a 543-room hotel, 1,200 multi-family units (800 in two 20-story condos), the marina will expand to 200 wet slips and 200 dry slips, 55,000 sq. ft. of office, ~25,000 sq. ft. each of retail and restaurant, a spa facility, and more! I think this will finally bring the property value back to what I had planned before I purchased my home, as developers will be looking to buy some of these older properties and redevelop them for luxury homes on the revamped golf course. They are still in the planning phase, waiting for a zoning hearing to make this redevelopment possible. Then come the permits and literally years of construction, but I can’t wait!

Wish me luck that this time is different!