How I paid off my student loans

I’m on a bit of a high right now guys… I just paid off my student loans!!! I had about $29000 in loans when I finished school. How did I pay that much off in less than two years after graduating? Well in addition to paying about as much as I possibly could for the last several months, I came into a little bit of money. How did I get said money? Before your imagination gets the better of you it was nothing illegal or immoral. I sold a house. My husband and I sold our first house.

Buying our first house

It’s a bit unconventional for a millennial, but I bought my first house at the ripe old age of 21. I was fresh out of college and had recently moved in with the Mr (then fiancé) in a small town.

He had graduated a year before me and was living there because that was where he had been offered a job right out of college. I moved in with him after I graduated.

At first, we lived in a lovely little apartment where we paid $650/month rent. We knew the rent would be going up the next year and thought it would be a better use of our money to buy instead of rent. Hey, we were small-town kids and obviously slightly delusional.

We attempted to be smart about the process of buying a house by giving ourselves a budget that we thought we could cover if one of us lost our jobs. I was in an entry-level job at a non-profit and he worked in education, it was NOT a big budget.

The view from our back door

We discovered that most homes in our budget were divey little condos that not even the Property Brothers would want to flip. However, if we were willing to spend a little bit more we could buy a townhouse in a new development with the cutest little homes. Out the back door was a clear view of the mountains. We fell in love and we bought it with 0% down using a Rural Development loan – we even rolled the closing costs into the loan amount. I cringe now, admitting that out loud. I said we attempted to be smart about the process, I’m not saying we actually succeeded.

 

Realizing the house wasn’t in a location we wanted to stay in

Fast forward a year and we were feeling discontent in the town we were living in. It was a beautiful area, don’t get me wrong.  We had world-class hiking literally 10 minutes from our front door. I’m not exaggerating with an improper use of the word literally, we were THAT close. However, we hadn’t found our community or our sense of belonging and we were both feeling an urge to experience the world a little more.

I was working on a Master’s program at the time (the source of my loans) and knew I would need to complete an in-person internship before finishing the program, so we sat down one evening in front of the computer and began dreaming. If we figuratively threw a dart at a map, where could I complete my internship and where could he get a job? We ended up settling on Nashville.

We applied for jobs, got offers, and made arrangements to move.  But we had bought that house. And to add another layer to it we had gotten halfway through finishing the basement (thanks in no small part to the wonderful help of my grandfather).

How do you sell a house that you just bought with a half-completed renovation project, in which you literally have 0% equity?

Well, you don’t. If you do, you end up losing a lot of money. We rented it. After advertising it on a local Facebook sale group we made an agreement with someone on a rent-to-own deal. 

The view from one of our hikes

They agreed to finish the basement too, in exchange for being able to sublease it. We agreed and felt surreally lucky in the whole deal. I wrote up the agreement myself by piecing together other agreements I found online.

One week after our wedding, we packed up our house and set across the country to Nashville. We didn’t make much money on the house as a rental, but it was enough to cover the mortgage.

Long-Distance Landlording

Fast forward three years and our rent-to-own tenants decided they wanted out of the deal. Their plans for the property had ended up changing and I think subleasing wasn’t working out the way they wanted. The tenants had also finished the basement renovation by this time. The value of the property had increased to be more than the sale price we had agreed upon in our rent-to-own agreement. We agreed to give them back their $1500 deposit as a concession for their work on the basement, in exchange for them agreeing to end the deal.

We then decided to be more conventional and put the property up for sale through a realtor. However, the economy wasn’t on our side. Wyoming is an energy-dependent state, the energy markets had tanked over the previous couple years, and an important oil company had just left town. It was not a seller’s market.

We knew we could survive three months paying that property along with the house we lived in. We only got one lowball offer and ultimately put it back up for rent. This ended up being in the dead of winter which is not a good time to find tenants in Wyoming.

Luckily, though, we found someone to move in. This time we used traditional rental agreement and a rental management company. We still barely broke even.

Eight months into the lease our realtor called us. He knew someone who wanted to purchase a condo unit on our street and wanted to know if we wanted to sell. We couldn’t say yes fast enough. They offered a fair purchase price and the realtor decreased his commission because the property wasn’t technically listed when he approached us (less work for him). Today was the closing day!

Just outside of town

Making enough profit to pay off my student loans

Ultimately, we made a profit because the condo we bought was new and the developer raised the prices of the new units they were still building. Finishing the basement only helped slightly. The profit was just enough to pay off the student loans that I’ve been paying on for almost two years.

Looking back at this story there were so many ways things could have gone wrong. I can see a million and one mistakes we made:

  • We should not have bought a home outside our budget
  • We should not have bought in a town we knew we didn’t want to stay in
  • We could have lost a ton of money by not putting anything down
  • We should not have allowed a tenant to do renovations. Luckily, they did all the work to a very high degree of quality, but that was a huge risk!
  • If we had ever had problems with a tenant paying rent, we would have been financially sunk
  • We should not have entered into a rent-to-own situation or used questionable legal documents
  • It was naive to think finishing the basement in a new construction home would be so worth it and make us so much money. It didn’t even matter to our buyers, they are retirees who don’t even plan to use it.

Overall, this was a monumental learning experience, and I’m feeling nostalgic about that little house at the moment. However, we live in a place where we are happier now. By being free of a long-distance rental property and free of student loans we will be in SUCH a better financial situation.

Have you ever had a situation where you look back and you’re amazed things actually worked out?

 

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4 Comments

  1. I’m glad it worked out to finally sell the house! I definitely wouldn’t advocate for ever buying a house with less than 20% down. You gain a lot more long term flexibility.

    I went through selling my first house two years ago. I agree that it can be a bit emotional, but it is a lot better to sell it if your goal isn’t land-lording.

    1. We may be open to investing in rental properties in the future, but I want it to be an intentional decision and not done long-distance! 😉

    1. It’s hard to describe, we just didn’t feel like we had a supportive community or network there.

      Nashville was a great learning experience and we really enjoyed exploring a new place. It’s a fun city. We’ve since moved once more to be close to our families and that’s where we’ve been happiest.

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