NEW YORK (CNN/Money) -
Hillary and Mike Bernier recently got on the fast track.
The Atlanta, Ga., newlyweds tied the knot 15 months ago when Mike was in the red. But he started reading financial advice books around that same time -- including Robert Kiyosaki's "Rich Dad, Poor Dad" -- and it changed his perception of wealth.
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| Hillary and Mike Bernier |
They've got the numbers to show for it. After weighing their options, the Berniers decided to try their hands at real estate investing. They now own three properties, worth a total appraised $670,000, of which they have $227,000 in combined equity.
"We really started with nothing," Mike said. "But there's no magic to real estate investing, just certain things you do and don't do."
After doing some research, the couple found a fixer-upper for sale by owner, which they bought for $160,000. They got a "construction mortgage" for $222,500 at 7 percent, allowing them to borrow against the "ARV" or after-repair value of the house. The loan, from a local bank, required no down payment and funded both purchase and reconstruction.
After seven months of elbow grease, they doubled the house's value --it's now worth about $320,000. Mike, 36, and Hillary, 34, live there, in the Oakhurst neighborhood of Decatur, Ga.
"We hired a good consultant to help with contracting and help us expand the house," Mike said. "There were a lot of ups and downs; it was our first trial by fire."
They have since refinanced the construction loan to a 5:1 adjustable-rate mortgage, which locks in a low 4.5 percent rate for the first five years; after that, its rate will fluctuate. But Mike and Hillary aren't concerned about the possibility of being handcuffed to the mortgage if rates jump a few years from now -- they don't plan to stay in the house for more than seven years.
"We currently pay about $1,300 a month on that mortgage," Hillary said. "That's what we used to pay to rent our townhouse, which was almost half as small."
While they signed for their home, they also scored a rental property for $60,000, now worth $100,000, in a low-income area of Atlanta. Most of their tenant's rent pays the mortgage on the house, and a remaining $250 a month goes to an emergency fund.
The third house is a little different. They bought it earlier this year for $150,000, with yet another zero-down construction loan, but they don't plan to rent it -- instead, they plan to partner with a contractor and add a master bedroom and bath, and sell it for $250,000 to $275,000.
"We want to flip this one around fast and build more cash," Mike said. "Then we buy more rentals. The plan is to do a flip, buy a rental, do a flip, buy a rental, and so on."
Flip, rent, flip, and rent: that's the plan for the foreseeable future. But Mike and Hillary do have day jobs as well, despite their zeal for real-estate projects.
He's a graphic designer, who works with Turner Media (which is owned by AOL Time Warner, parent of CNN/Money), TNT, and the Atlanta Braves. She's a management consultant at Neighborhood Reinvestment Corp., a congressionally funded group that helps non-profits build affordable housing. Together, the Berniers bring in about $100,000 a year, before taxes.
That translates into about $6,100 a month. About $3,600 goes to the mortgage on their house and to joint monthly expenses, including $100 that's automatically deducted to a savings account and $500 that goes to a variable universal life insurance policy.
They pocket the rest in individual accounts, to cover personal expenses – clothing, cell phone bills, entertainment. But the Berniers like to keep costs low in most areas.
"We recently looked at leasing a Volvo S60," Mike said. "The lease, about $480 a month, was affordable. But we've started working with a network marketing company, and it provides a car bonus after a specific period. We decided to wait until the business pays for the car -- we really don't waste a lot of money on extras."
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More Millionaires in the Making
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Hillary just began maxing out her 401(k) plan and also has a Vanguard mutual fund account, worth about $8,200. They've had the variable universal life insurance policy for just 14 months, and it currently holds about $4,000.
"We have a few traditional things," Mike conceded. "But truthfully, we're not banking on them at all. Investing in real estate is how we really plan to take care of ourselves."
The Berniers have their hands full with their properties and their jobs. But they intend to focus on the real estate track: Their goal is to own about 20 properties.
"We don't have children yet, but what we really want to do is retire in a few years, and spend time full-time with a family, or travel," Mike said.
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