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NEW YORK (CNN/Money) - Contrary to what another North Carolinian wrote, you can go home again. At least Jim Elliott did.
After years traveling as a Coast Guard flyer, Jim Elliott moved back to his hometown of Elizabeth City, N.C., to a life made a little more interesting – and lucrative – by real estate investing.
Elliott had already started, albeit slowly, well before he moved back home.
He bought his first house in 1995, paying $135,000, for himself and new wife Cindy on the northwestern coast of Puerto Rico, where she hails from and where he was stationed at the time. It commanded a sea view and came with swimming pool.
Three weeks later, Elliott went into a meeting with four other pilots where they were told the Guard had eliminated one of their jobs.
"They looked around the room, saw me, and said, 'you're leaving,'" says Elliott. The Coast Guard transferring him to Hawaii.
After heading west, he and Cindy tried to turn the Puerto Rico house into a vacation rental property – a mistake.
"You cannot manage a property from 6,000 miles away," Elliott says. "The rent only covered half the mortgage and we only got that one out of every two months, on average."
He gave up on it after two years, selling it for about what he paid.
Look homeward
By the late 1990s, the Elliotts began looking to move back to North Carolina. A friend in the real estate business there pointed Elliott to a 2,500 square foot, four bedroom, 2-and-a-half bath, contemporary.
The house was a VA foreclosure. At first, Elliott thought it was too expensive, but the VA dropped the price every two weeks by $4,000 or $5,000.
After more than four months, it had fallen to $175,000, and Elliott pulled the trigger.
He transferred to a nearby Coast Guard base in 1998. The family, including daughter Jasmine, now seven, lived in the house until its sale, for $213,000, in September 2002.
Meanwhile, there were other deals. The VA had another foreclosure that Elliott bought for $70,000, with $500 down. He rented it out for two years, breaking even after figuring mortgage, taxes, and expenses, and sold it last summer for $101,000, realizing a net profit of about $25,000.
The next deal involved a neighbor of his grandmother. He bought the house, "mostly to be able to control who moved in next to her," for just $25,000. He also got his father involved.
"He was complaining that the bank was paying a half-a-point interest on his savings." Elliott remembers. "I said, 'why don't you lend me the money for this house.' It's a win-win."
Elliott got a no-money-down mortgage at a competitive rate and his father gets a big boost over the return the bank was paying him. He recently had it appraised for $55,000.
Elliott also bought a house a bit further out in the country, paying $150,000 for 2,000 square feet, a two-car garage, and a greenhouse.
Making it a business
In September of 2002, the Elliotts took their biggest real-estate step, a $425,000 purchase of the Culpepper Inn, a 12-bedroom, 13-bath, brick colonial, bed and breakfast. They now live in several of the rooms and run the rest as an inn.
Some rooms rent on a monthly basis for about $700. The guests often come from one of several military bases in the area. In the summer, the Elliotts rent out as many as nine rooms, nightly, to vacationers for between $85 and $135 a night.
Elliott figures their net from all the properties at about $30,000 annually, a nice piece of change considering that they haven't had to invest very much up front.
The Elliotts spread their investment risk. They have a total of nearly $300,000 invested in IRAs, Roths, 401(k)s, stocks, and mutual funds.
Not that Elliott is worried about his real estate investments. Since this area of North Carolina has not had a big price run-up, a severe drop seems unlikely. Plus, he believes he bought well enough that even if markets decline, income from rents can tide them over until conditions reverse.
Long range, Elliott wants to expand his lodging business. A local businessman has been trying to develop a 6,000-acre plot of land outside of Elizabeth City for three years. If that goes through, Elliott plans to be a part of it, building a 60-to-80-unit hotel.
Not only can you go home again, but you can have lots of places to sleep when you get there.
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