
Many people have horror stories about their first investment properties, but fortunately my first property has performed really well so far. I’ve made money from the home via Airbnb (short term rental) and renting to tenants via a 1-year lease (long term rental). I thought I would talk about how I acquired the property, how it has performed so far, and lessons I have learned.
Moving to Pensacola
I moved from Tokyo, Japan to Pensacola, Florida in September of 2015 on three-year orders to be a flight instructor. I didn’t know very much about real estate at the time, but I knew I wanted to live in a particular neighborhood called East Hill. It was (and still is) a great neighborhood, and I had a number of friends living there. There weren’t many homes for rent, so I started calling real estate agents that had homes for sale in the area asking if the owners would be willing to rent. This worked pretty well, and I found a place to rent for $1,500 per month. Over the next 8 months I listened to the Bigger Pockets podcast, learned more about real estate, and learned more about my neighborhood. I realized that I could purchase a comparable home to the home I was renting and pay much less per month!
I hired a real estate agent to help me find a home. My budget was right around $200,000 which would mean a mortgage payment of around $1100 per month – just under O-3 BAH (Base Allowance for Housing) for Pensacola. I did not use my VA home loan since the price of the home was relatively low and I had enough to put 20% down on a conventional home loan. I figured at the time that I would save my VA loan to purchase a home in the future in a more expensive area.
The Deal
We found a home that was newer, larger, and more updated than the home I was renting with a listing price of $208,000. The inspection revealed that the home would need a new roof within a few years so we got $10,000 knocked off the purchase price and closed at $198,000.
Purchase Price: $198,000
Bedrooms/Bathrooms: 3/2
Square Footage: 2,134
Interest rate: 3.625% (conventional)
Down Payment: $45,902
I put 20% down ($45,902 total with closing costs) and lived in the home for about a year and a half before I started doing Airbnb.

Short Term Rental – Airbnb
My girlfriend at the time (now wife), and I wanted to live together and we decided her condo in Pensacola was a better option than my house. The problem is, I would now have this large home going unused. Thanks to my budding real estate knowledge, I had the idea to offer up my home on Airbnb starting in the spring of 2018. This was very successful and I quickly became a “superhost”. I used a local house cleaning company to turn the home over between stays and profited roughly $1,500 per month over that summer, which more than paid for the mortgage and other expenses. I enjoyed managing the short-term stays via Airbnb, but summer was ending soon and I was moving to San Diego in the fall. I toyed with the idea of continuing to rent the home via Airbnb, but ultimately decided stop renting it on Airbnb. The summertime demand for Airbnb’s in Pensacola is strong, but I was concerned the demand would decrease at the end of summer. So I decided to find long-term tenants for the home.
Renting to Flight Students
Roughly 6-8 weeks prior to my move-out date of the house, I put up the Zillow ad to test the rental-price waters. I listed the home for rent for $1950, not thinking it would rent for that much, and I would have to drop the price until someone agreed on the price. To my surprise, I received a lot of interest in the property within a few days, and two flight students agreed to rent the property for $1950! I used Cozy.com to run a background and credit check on both tenants. Then I used a simple lease template that I got from a buddy of mine, and we signed the lease in person.
My mortgage at the time had decreased to about $1,050 due to lowered property taxes, so I would make roughly $900 a month before non-mortgage related expenses! I decided to self-manage the property so I saved a lot of money there. They ended up being great tenants and stayed for an entire year.
Those tenants had each of their girlfriends living with them, and both couples wanted their own place so they didn’t renew the lease. I reactivated the same Zillow ad with the home listed at $1950 again, but I didn’t get many responses for some reason. So I dropped the price to $1850 and got a response within 24 hours. Flight students again! They were about to head down to Pensacola to start flight school and wanted to live in East Hill. I went through the same process to ensure they had the necessary credit, and got them to digitally sign the lease since I was in San Diego at the time. These tenants should be staying through December of 2020.
For the 2019 tax year, my total profit on the Pensacola house was about $9,200 which makes for a 20% cash on cash return! Also, the value of the home (using the Zestimate on Zillow.com) has increased by 50% in 4 years to over $300,000! Needless to say, this home has been fantastic as a rental. The cash flow numbers are high, it attracts great tenants, and it has seen enormous appreciation well above the national average.
The maintenance and repair expenses have been minimal and my vacancy has been 0% since I started renting to long-term tenants.

What Have I Learned?
- I should have used my VA loan. This would have preserved more capital for future investments, and I would have gotten a lower interest rate. Hindsight is 20/20 though, and I don’t really regret using the conventional loan. I’m still hitting great metrics on this house even with the conventional.
- Home warranties are not worth the cost! I used a home warranty for the first couple of years, and it just wasn’t worth it. You have to pay a flat yearly rate (which was around $500 for this house) plus $75 every time someone comes out to repair something. This home is in great shape and I’ve saved money by cancelling the home warranty.
- Sometimes it’s better to be lucky than good! My real estate knowledge was limited when I purchased this home. However, I knew that I would be able to rent the home for at least $400 more than the mortgage, so I’m glad I pulled the trigger and bought the home. I could not have anticipated that it would rent for almost double my mortgage payment, nor could I have anticipated that the home would go up in value by 50% in only 4 years! Sometimes you just get lucky with the timing.
Hopefully this article inspires you to take action and buy your first rental property. There are so many ways to acquire your first property, and it can be done no matter your experience level, net worth, credit score, or personal background. You just need a positive attitude and a desire to get that first property no matter what! I’d love to chat more about your real estate journey. Send me an email at doug@honorandequity.com or send me a message on Instagram!
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