|Susan Rodman, left, with partner Luiza Faical
BEND, Ore. (CNN/Money) – When Susan Rodman made her first real estate investment she had two things in mind: peace and quiet.
"I wanted to come home from work and not hear anyone or see anyone," said Susan, who was 25 years old and just a year out of graduate school when she bought an $80,000 condominium in Fort Lauderdale, Fla.
Although the circa-1960s condo was terribly outdated, Susan was able to look past the green appliances and shag carpet and focus on the oceanfront views.
Today, the 35-year-old physical therapist still puts a premium on quality of life when buying real estate, even if it's just rental property.
"I look for places I'd be happy living in," said Susan, who along with her domestic partner, Luiza Faical, now has more than $800,000 in equity in a house and four condos in Miami and Fort Lauderdale.
A house by the bay
Susan lived in her first condo for four years and – after knocking down walls, putting in hardwood floors and renovating the kitchen – could have stayed forever if it weren't for the fact that the condo association didn't allow pets.
In 1999, Susan bought a ranch-style house with ocean access, adopted two Jack Russell terriers and rented out her much-loved condo. "My idea was to hold onto the condo so I could retire there some day," said Susan, who used her savings to put down 20 percent of the $202,000 sale price.
After just a year in her house, though, Susan decided that the 30-minute commute from Fort Lauderdale to Miami was too far with two dogs to worry about.
"I was always rushing home," she said. She sold that house for $280,000 in early 2001 and bought a 2,000 square-foot house five minutes from work.
Now, Susan lives in Shorecrest, on Biscayne Bay just north of downtown Miami.
"This is an area that was undervalued at the time," she said. Similar houses have recently sold for more than twice the $287,000 Susan paid. "I got in just in time."
Real estate as an investment
In 2002, Luiza moved in, and the two started making joint investments. Their first project was a $30,000 renovation. "We completely renovated the house to make it 'ours' and add value," said Susan.
They also expanded Luiza's smoothie business, Smoothie Jungle, and began shopping the market for rental property.
They found a foreclosed studio apartment in North Bay Village, an island in the middle of Biscayne Bay just over the causeway from their house, which they bought for $45,000 in September 2002. Similar units in the building are now selling for more than $100,000, while new one-bedroom apartments in the area are selling for $300,000 to $400,000.
"All of the neighborhoods near Biscayne Boulevard are doing really well," said Susan, who in 2003 got her real estate license in order to save on commissions and have access to the multiple listing service. "The city is really trying to bring people to the downtown."
A more conservative approach
In May of this year Susan and Luiza bought two condos in Deerfield Beach, an area just north of Fort Lauderdale. "We were just looking for one but found two that seemed like great deals," said Susan.
The first condo, a two-bedroom, two-bathroom unit, had been remodeled with high-end finishes, such as marble tile and granite countertops, but was selling for the same price as outdated units in the complex, said Susan. She estimates that the condo is worth at least $20,000 more than the $108,000 she paid.
Two weeks later they closed on the second condo. "We bought it sight unseen," said Susan, explaining that she visited the condo but couldn't see the interior because the condo's lockbox (which uses a combination to let in real estate agents) would not work after a certain time.
"While I was standing there other agents showed up with clients," said Susan. "That night I called and offered $2,000 more than the asking price, in cash."
Susan and Luiza's $80,500 offer was the first and best of a dozen for the unit. To make good on their promise to pay cash, they wrote a check from their home equity then promptly refinanced with a traditional mortgage. "I didn't want that amount of money on a variable rate," said Susan.
While it's increasingly common for real estate investors to leverage their home equity, Susan and Luiza have taken a more conservative approach. With the exception of Susan's first condo, they've put down 20 percent of their own savings to buy each property, which they've financed with 30-year fixed rate mortgages or five-year adjustable rate mortgages.
The $3,200 they collect each month for rent is exactly enough to cover their mortgages and condo maintenance fees.
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"I live a very modest lifestyle and am always thinking about the future," said Susan, who also has $40,000 invested in mutual funds and cash savings ranging from $4,000 to $10,000. "Luiza is the same way."
Although Susan and Luiza hope eventually to buy a multi-unit building, they're taking their time. For now, they're focusing on their next big investment – a pool.
"We'll save for the first half and use home equity for the second half," said Susan of the $40,000 expense. "Even then, we'll set up a plan to pay it back as quickly as possible."
They want to be up to their ears in cool water, not debt.