We Bought Our 1st Investment Property – with Cash!

As excited as I am to share our latest news with you, I’ve also been pretty anxious about it. My anxiety just comes with the nature of the territory of the decision I made toward the end of August 2016 – that if I’m going to start a blog to share our journey with you, I’m going to share it all the way. I’m not going to only share our successes while hiding our blunders, I’m not going to refuse to change my mindset or view on anything simply because I had previously shared an opposing view, and I’m not going to hold back due to feeling insecure when we try new ventures.

Using a pseudonym for my blog not only ensured that things wouldn’t get awkward with people I know in real life – people who have no reservations when it comes to expressing that they do not understand why we choose such a different lifestyle than they do – it made my insecure, self-conscious and extremely private self feel braver about sharing my thoughts and feelings.

It was really easy and always enjoyable in the beginning. I loved being anonymous and looked forward to opening my laptop or tapping on Instagram every time I had a new experience to share or just had things on my mind that I knew you guys would relate to. Everyone who read my blog posts were strangers, and my minuscule following on Instagram consisted only of fellow Dave Ramsey Baby Steppers who were getting out of debt. When the #debtfreecommunity later received its name, it was a tiny community. We all “knew” one another and were friends, even if we had no clue what we all looked like or what our real names were.

As awesome as it is that our community has grown so much over the past few years, and as supportive as it continues to be, its no longer tiny – and for me, its no longer completely anonymous. Several of you know my real name now, and I have met some of you in person – a few even more than once.

And since the purpose of paying off debt is for there to be an end to the debt, and therefore an end to one’s debt free journey, I have since shared much more about our continuously evolving financial journey. From opening my very first credit card since the store cards I had at age 18, to traveling out of the country for the first time and spending money like crazy to celebrate paying off our house, to announcing our goal of saving $100,000 to purchase our first investment property in cash.

I didn’t tell you guys this, but I was reluctant to announce that goal. I could tell from some of the reactions I received any time I had expressed the desire to pay cash for investment properties on Instagram that I would have to endure much more doubt from people than when I was sharing our mortgage-free journey. And I was right. While the vast majority of the sentiments expressed to me have been positive and supportive, I have consistently received messages and comments from people over the last year questioning what we’re doing, why we’re doing it and how we’re choosing to go about it.

As much as most of my followers follow Dave Ramsey and have vowed to never go into debt again, some of them seemed to think we were crazy, unrealistic or flat out stupid when I announced we would be saving to pay cash for a property. This would be expressed again when I would share a savings update, and again when I would share another one – and considering that I’ve shared these updates at least once per week over the last year on Instagram while gaining new followers along the way who would inevitably ask what we were saving for – I got accustomed to it.

But it all affected me at first. Every single message I received from people out of state or out of country asking how on earth it was possible that we could pay cash for a house (yes guys, I understand New Jersey has high property taxes, houses are expensive in Australia, and California is just insane) would instill just a little more doubt in me. Not to mention the array of questions from people who just happened to stumble upon my account. Why pay cash?! What if the market changes?! Aren’t you afraid of nonpaying, damage inflicting tenants?! Why not just throw all your savings in index funds?! Do you not think you should be contributing more to your 401Ks?! Here’s what we’re doing – (insert tales of househacking/multi-family properties/commercial properties/deals made with as little cash as possible here) – why don’t you do that instead?!

And here I am again – finding myself a little anxious and a little reluctant to share my latest announcement with you guys. But the messages and comments from those of you telling me that our journey has inspired you to start budgeting and paying off debt, to pay off your mortgage, to begin travel hacking, to figure out systems for living on less and maximizing your savings and to even begin your own goal of saving to buy your first investment property with cash show me every time that I can’t hold back just because I’m afraid of what people say. I have to continue to share every step of our journey for those of you who find some aspect of it to relate to and apply to your own lives.

So with all that being said, here goes: We bought our very first investment property – with cash! Before I give you all the details though, I want to start with a recap of the $100,000 savings goal I mentioned a couple minutes ago.

Our Savings Goal

On September 1, 2018, we started a brand new goal – saving $100,000 to purchase our very first investment property in cash. If you’re new to my blog, you probably have questions about every aspect of this sentence, so let’s cut it down.

First, why real estate?

For us, it’s all about having direct control and keeping ourselves obsessed. We know that maxing out our 401Ks and Roth IRAs while contributing everything extra we can to VTSAX is a tried and true path to wealth, but the thought of it does nothing in terms of setting us on fire. We like setting new, relatively short-term goals and adjusting our sails after those goals are complete, and we like knowing that our success in real estate will depend on what we put into it.

Why cash?

We absolutely love being debt free (insert shrug emoji here).

And why $100,000?

Well for starters, setting an unspecific goal is not really setting a goal at all, is it? Simply setting a “goal” of saving money wouldn’t spark much of a flame to keep us going. After all, if we saved $5 per month we would be hitting our “goal,” but considering that we’re completely debt free with two steady incomes this amount would not be a result of pushing ourselves in the least.

Choosing the amount was pretty easy for us. We were inspired by our #debtfreecommunity friend Ryan Conrad who was working on a savings goal of $100,000 toward his and his wife Alma’s own first investment property. We liked how nice and clean this number is and knew that not only would we be able to save up this amount within two years, it was very probable that it would cover all the costs associated with the purchase, whatever renovations would need to be done, as well as an emergency fund for the property.

However, we saw no need to wait until we reached this amount to start looking. If we came across a good deal that would allow us to jump in and get started, why wait? Until then, working toward this specific number kept that flame burning hot.

The Property

For our first purchase, we wanted something pretty small-scale to start with, so were open to a duplex or a 3BR/2BA or 2BR/1BA single family home. Above all, we just wanted a property that we could pay cash for within the next two years, for the renovations not to be too overwhelming, and most importantly, for the math to make sense. While we obviously want the property to cash-flow, we also view the first purchase as an investment in our education and experience. Some people pay thousands of dollars in real estate courses, and we would rather just dive in and get real experience.

Both of us were born, raised and remain in a small town west of Knoxville, and we therefore know our county extremely well. Because of this, our search was focused on a pretty small area, no more than 20 miles away from our home, and the house we ended up choosing is only eight miles away.

Most of the landlords in this area are older men who tend to be pretty neglectful with their properties, and we are really looking forward to providing our future tenants with clean, maintained homes to live in while bringing up the value of neighborhoods that we were raised in. Also, since my husband is a narcotics detective and works closely with all of the other narcotics detectives and fellow police officers of our county, we are confident in our ability to weed out potential problem tenants.

House Details

Type: Single Family
Location: Knoxville area, TN Year Built: 1945
Bedrooms: 2
Bathrooms: 1
Heating/Air: Central
Size: 885 sq. ft.
Lot Size: 0.25 acres

Living Room
Utility Room
Bedroom 1
Bedroom 2


None – it’s move in ready! Totally kidding, obviously. In case you’re curious about the kitchen and utility room (or lack thereof) – there was a fire resulting from the previous owners leaving their grill on and unattended, which is why the deck, siding and roof are brand new.

Our savings dropped to $11,616.87 from $41,840.18 after we purchased the house. We are continuing to save now to cash-flow the renovations, and at the time that I’m writing this, we currently have $16,608.99 saved.

Below are the main projects to be tackled, and our contractor will handle all of this. My husband is super handy and could do several of these projects, but we would just rather pay to have someone else do the work while we’re spending our days at our full-time jobs.

  • Attic access repair
  • Bathroom exhaust fan installation
  • Bathroom expansion
  • Beam installation
  • Door frame and door installation for basement exterior
  • Electric service installation
  • Fixture installation
  • Floor joist repair and jack up floor
  • Flooring installation
  • Hall closet (1) removal
  • Hall closet (2) door installation
  • Insulation
  • Kitchen cabinet and island installation
  • Landscaping
  • Paint
  • Sheetrock and finish
  • Tub surround and vanity installation
  • Wall removal between kitchen and living room
  • Wired smoke and carbon monoxide detector installation
  • Wiring

We’re very familiar with our contractor’s work, as he has previously done large projects for Ron’s coworker and has done a few things for us at our own home. He will begin on August 26, and he anticipates that the timeline will be about three months.

Purchase Process


As I mentioned a few minutes ago, September 1 was the start date of our savings goal, and we had been keeping an eye on our local market since about a month before this date, mostly on Realtor, Zillow, Craigslist and Facebook Marketplace. When our savings reached around $35,000 in early May, buying a fixer upper in our area suddenly became a possibility, and we began looking more seriously.

On June 6 we viewed a house after setting up an appointment with an agent through The house was a foreclosure listed at $16,900 that was four houses down from the house I grew up in, and we knew that we could get at least $800-$850 in rent from it. After having our contractor look at it with us, we went under contract and put up $500 in earnest money, but we ended up backing out a couple weeks later after the inspection. When the inspector shimmied back through the crawl space opening and asked if we wanted to see the pictures, we knew right away that the numbers were no longer going to make sense. We signed our release on June 26, and on the next day we viewed the house that we would end up buying.

We walked through with our agent on June 27, walked through again with our contractor on the 29th and told the agent that we would like to offer $27,000. This house was listed at $26,900, but the agent said there were strong offers on the table, and she didn’t think $27,000 would snag it. We offered $30,000, and our offer was accepted the next day. We closed less than two weeks later.

And though we didn’t quite “roll up with a briefcase full of hunnits” as our #debtfreecommunity friend asked, the process of buying a house with cash was certainly a lot faster and simpler – and the stack of paperwork to sign at closing was certainly a lot smaller too – than I remember it being when financing our home a little over five years ago. We didn’t even have to provide a proof of funds from our bank; I just took a screenshot of our Ally savings account balance while viewing the first house and texted it to our agent.

  • June 27: Initial walk-through
  • June 28:
    • Ron walked through again with contractor
    • Offer submitted
  • June 29: Offer accepted
  • July 2: Title company agreed to hold earnest money from previous offer to be used toward new purchase
  • July 3: Home inspection with contractor present
  • July 8: Termite inspection
  • July 9: Received settlement figures in the amount of $30,223.31
  • July 10:
    • Wire transfer from Ally savings account to title company
    • Final walk-through
  • July 11: Signed insurance policy to go into effect July 12
  • July 12: Closing

The Numbers

Since we’re so new and unexperienced, any estimates I list below are pretty conservative. I’m estimating the gross monthly rent to be $700, though we will most likely shoot for $750 to $800. I also use pretty high percentages when estimating the variable expenses even though so many aspects of the house will be brand new by the time we’re done, and we include 10% in monthly property management fees even though we will be self-managing. The reason for this is that in addition to placing a value on our time, we wanted to run the numbers as if we will have a property manager in case we do decide to do this down the line once we have a larger portfolio.

Acquisition Costs

Inspections $365
Purchase Price$30,000
Closing Costs$723
Estimated Rehab$25,000

Total Estimated Acquisition Costs: $56,088

Annual Income

Gross Annual Rent $8,400

Total Annual Income: $8,400

Annual Fixed Expenses

Annual Insurance $438
Annual Property Taxes$614

Total Annual Fixed Expenses: $1,052

Annual Estimated Variable Expenses

Estimated Vacancy (8%)$672
Estimated Maintenance/Repairs (5%)$420
Estimated Capital Expenditures (5%)$420
Estimated Management Fees (10%)$840

Total Annual Estimated Variable Expenses: $2,352


The definitions I discuss below are from a combination of all the real estate investing podcasts I’ve listened to and all the blog posts and books I’ve read over the past couple of years, and the equations use the numbers I just listed above. My favorite sources are BiggerPockets, Afford Anything and Coach Carson. If you’re new to this too and want more information about these formulas, please check out these sites instead of asking me. I don’t feel comfortable answering questions about things I have not actually experienced yet!

One Percent Rule

When initially evaluating a property, the One Percent Rule is a rule of thumb that states the gross monthly rent should equal at least one percent of the total acquisition costs. If a property meets the One Percent Rule, it would take 100 months for the property to pay for itself. This rule is qualified by dividing the monthly gross rent by the total acquisition costs.

$700 (Gross Monthly Rent) / $56,088 (Acquisition Costs) = 0.0125 or 1.25%

Gross Rent Multiplier

The Gross Rent Multiplier (GRM) is the equation that tells you how many months it actually will take for you to recoup the costs of your investment. The equation is the opposite of what I used above, so it is done by dividing the total acquisition costs by the gross monthly rent.

$56,088 (Acquisition Costs) / $700 (Gross Monthly Rent) = 80 Months or 6.5 Years

Net Operating Income

This is where I will use the numbers in green and red that I listed a minute ago. The Net Operating Income (NOI) is the gross annual rent minus fixed expenses and variable expenses, resulting in your positive cash flow.

$8,400 (Gross Annual Rent) – $3,404 (Fixed & Variable Expenses) = $4,996 or $416.33/mo.

Capitalization Rate

The Capitalization Rate (Cap Rate) tells the property’s return on investment by dividing the net operating income by the total acquisition costs.

$4,996 (Net Operating Income) / $56,088 (Total Acquisition Costs) = 0.089 or 8.9%

What do These Numbers Mean to Me?

My husband and I have no desire to become fancy real estate moguls. We just want to bring in enough income to give us choices and to ensure that we never have to worry about money. We don’t need a lot to be content, and based on figures from our current monthly budget, our needs only come out to about $1,300 per month ($15,600 per year), so our current focus is building a portfolio that will bring in enough positive cash flow to cover this amount. Since we conservatively calculate the positive cash flow of this first purchase to be $416 per month ($4,966 per year), it will put us almost a third of the way there.

After getting tenants in place, we will take some time to save and cash flow a few other things that we want and need, including replacing our family vehicle, replacing our flooring and upgrading the kitchen and bathrooms of our home, and a trip that Ron will be taking in May. Afterwards, if we’ve enjoyed the process of becoming landlords and desire to continue on this path, we will start a new savings goal toward the cash purchase of our next property. Since we will be saving every cent of positive cash-flow from this first property, these savings will be combined to get us to our next purchase faster.

Alright, that’s everything I have to tell you guys so far about the start of this new journey of ours! Feel free to ask any questions you have, but keep in mind we’re newbies working our way through for the very first time, so I may not have an answer for you yet.

Thanks so much for waiting patiently for all the details, and thanks so much more for the unwavering support you continue to show me. I’ll keep you updated along the way, so check back soon to see how we’re doing!

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  1. Sarah says:

    Looks like a great investment! Congratulations and I’m excited to follow along. We’d love to do the same thing!

    1. Ellie Mondelli says:

      Thank you so much!

  2. Mysterious 💰 says:

    Simply Outstanding. Well done.

    1. Ellie Mondelli says:

      Thank you!!🤗

  3. Karen says:

    Such a well written blog post. Congratulations on your new purchases.

    1. Ellie Mondelli says:

      Thank you so much for that!!

  4. Megan says:

    SO PROUD OF YOU TWO! Your story is what got us started down the path to FI/living on one income and we couldn’t be happier for you guys. Let us know when y’all want to go grab some Mexican food. – Ryan&Megan

    1. Ellie Mondelli says:

      Omg y’all are the best! Thank you. We’ll definitely take you up on that soon!!

  5. Chris says:

    This is very well written and super informative. Loved seeing all the numbers written out. Great job you two! -Chris & Sarah

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