NEW YORK (CNN/Money) - Todd and Suzanne Egress have real estate in their blood. Both of their families regularly invested in property.
In Suzanne's case, the interest goes back to her grandfather, who, in turn, got Suzanne's dad started in real estate investing.
Todd's father, a schoolteacher in Washington D.C., also invested in property. Growing up, Todd watched him buy houses during down times and sell into upmarkets. He tries to do the same.
"We actually bought our first house even before we got married," says Suzanne. The three bedroom, two-and-a-half bath was being built in the Washington suburb of South Riding, Va. Until it was ready for occupancy, the couple lived with Todd's parents in nearby Fairfax.
They moved into it in July 1997, paid $199,000, and came up with a 20 percent downpayment by selling stock Suzanne owned.
Moving on up
Todd believes he will never lose too much by buying real estate. So rather than "dumping our cash into stocks," the young couple quickly set out to expand their property holdings.
Their second one came courtesy of Suzanne's father and stepmother. They owned a one-bedroom, one-bath condo in Falls Church, which they gave to the couple. They did so in two stages, the first at the end of 1999 and the second just after the new year of 2000. That qualified it as a tax-exempt gift.
Todd and Suzanne rented out the condo, which they estimated as worth $69,000, for $1,050 a month.
Todd was soon looking for more. "I was pushing Suzanne to move up," he says. He was concerned that the hot D.C. market might pass them by.
Although both had good jobs, they were not making a fortune. (They're both in telecom, he as a financial supervisor and she as a carrier-relations analyst.) Even now, their income amounts to about $130,000 a year, and that includes a bit of extra earnings from rents.
When he finally persuaded her to buy a new place in late 2000, it was a four-bedroom with two-and-a-half baths and cost $360,000. Options quickly drove the price over the $390,000 mark.
"We couldn't imagine paying the price for the model house we wanted," says Todd.
But the Egresses talked with a realtor and found out "exactly how much we could get for our house," says Todd. That turned out to be $275,000, a profit of $76,000 in three years.
Still, they had a hurdle to vault. The house was under construction, but they needed to make a downpayment to the builders. Fortunately, their realtor provided the solution by advancing them the deposit.
The house has since gone up in value to an estimated $650,000.
Son Brandon was born in May 2001 and Suzanne took a few months off before returning to work. Then, in 2002, her company went bankrupt and she was laid off. Luckily she landed another job three weeks later.
In 2001, Todd's sister bought a condo in Davis, W.V., a ski resort area, where homes seemed under priced. In March 2003, the Egresses refinanced their house, took some $63,000 in equity out, and bought a condo near his sister's.
This year, the Egresses bought in another resort area, but this time they went for sand not snow: Myrtle Beach, S.C., where Todd's folks own a home.
"I had asked my parents to put the word out that I was looking for property," says Todd. An acquaintance sold the couple a two-bedroom, two-bath oceanfront condo for $181,000, a 10 percent discount to the market rate, according to Todd.
The Falls Church condo was unloaded to pay for it and the Egresses did a 1031 tax exchange to avoid capital gains taxes.
The couple rents out both vacation condos by the week, with Todd's mother managing the Myrtle Beach property. The weekly rents they collect during the summer tourist season in Carolina and over the course of the ski season in West Virginia pay all the yearly condo expenses and yield a small profit besides. Plus, Todd and Suzanne can use the condos whenever they're vacant.
YOUR E-MAIL ALERTS
Follow the news that matters to you. Create your own
alert to be notified on topics you're interested in.
Or, visit Popular Alerts
The Egresses don't put every egg they own in the real estate basket. They have about $35,000 in retirement accounts, $15,000 in savings, and $12,000 in stock holdings. Best of all, they have no debt outside of their mortgage.
What they do have is a well-defined vision of their future in which they use real estate profits to help fund a comfortable lifestyle. Todd hopes to stop working well before normal retirement age and supplement his retirement income with payments from three or four rental units.
That, no doubt, will give him more time to instruct Brandon about the advantages of real estate investing.