How a HUD Foreclosure Helped Me Retire Early

by Veoletta Hayward · 6 comments

This is Veoletta’s story on how she was able to retire early. She will be sharing her financial tips from time to time on MoneyNing.

I began planning for retirement when I was 24. I knew I would never have a job that provided a pension or medical benefits so I bought a three unit HUD foreclosure in Alaska for $90,000. The house was trashed and I didn’t have the money to pay a professional to remodel the three units so I learned how to do it all myself, saving thousands of dollars in the process.

I needed the three unit home because without the rental income from the two apartments downstairs, I couldn’t afford to make the mortgage payment. I also got two roommates and as a result, the mortgage and all the utilities were paid for by other people and I lived free.

My intent at the time was to keep the home forever. It would be paid for when I was 54 and with the tenants downstairs, I would have a steady income and a free roof over my head for the rest of my life.

The mortgage rate at that time was 9.75%, and I kept that loan for eight years before I realized that was a very high rate. I refinanced for 15 years at about 6%, cutting seven years off the loan and saving $62,000 in interest over those seven years.

I lived in the house for three years (things change), renting my part of the house for the remaining 15 years that I owned it. During that time, I collected about a half million dollars in rent, well above the cost of the mortgage.

In 2006 when I was 42, right before the bubble burst, I sold the house for $390,000, making a cool profit of $300,000 on top of the $500,000 I collected in rent over the years.

My intent was for this house to allow me to retire when I was 54. Because I used every dime of the profit I made to pay off the mortgages on the other seven rental units I had purchased through the years, I knew I would be able to retire several years before I turned 54 as originally planned.

Two things stopped me from retiring in 2006 when I sold the tri-plex. One is that my son wouldn’t graduate from high school until 2011, so I saw no reason to quit my job. The second thing stopping me from retiring at 42 was that I didn’t have enough money from the sale of the tri-plex to pay off my own house and I wasn’t going to let go of the income my job provided until that mortgage was gone.

So for the next three and a half years I continued to work and I slammed that mortgage, almost paying it off. Although my son still had a year and a half left in high school I felt it was time to get rid of the stress my job added to my life and I retired at 45. I paid my house off in June of this year, the same month my son graduated from high school.

Now at the age of 47 I am completely debt free. My husband quit his job in June, the boy is off to college and we are living the life we always dreamed of living.

Buying that trashed tri-plex did exactly what I had intended for it to do. It allowed me to retire young. How do you plan to retire?

You may want to read this piece about how to retire happy too.

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  • mildred lane says:

    I took early retirement at age 56 from 38 yrs of working as a registered nurse, became bored, took a foster parenting class and became a foster parent that allowed me to adopt a 6 day old son when I was 60. I also invested in rental homes and selling owner financed which worked out well for us. I am now 75, son is 16 1/2 and we have had a great life. When he goes to college I plan to down size my large home, sale it owner financed and live off this and my social security. I have my burial arrangements done,paid for. A life insurance policy for the kids, an insurance policy for extended care living for me, no debt and so far doing fine. One set back was my grown daughter’s cancer scare and I helped her out w/ her bills for 17 months. PLAN AHEAD.

  • Bret @ Hope to Prosper says:

    Good for you Veoletta. I am your age but still 5-6 years away from my early retirement. This is an awesome story and I’m glad you pulled it off.

  • Vince Thorne says:

    I love stories about hardwork followed by success and yours qualifies. Hope the real estate market starts a steady growth so that there can be more such stories. Have fun in your retirement.

  • Raj Datta says:

    Amazing story. the most amazing part is being about to stick to your plan for 25+ years. In my analysis – 2 things allowed you to do this: 1. Being married to the right guy (matching money expectations among married couples is so rare) 2. Being in a job long enough to be able to make all those payments (& maintain the property).
    Congratulations, and remember to give thanks to whoever upstairs allowed you to fulfill your plans. God bless!

  • Beth says:

    I have read several stories about folks retiring early. I was wondering how you/they manage with health care expenses, since Medicare doesn’t kick in until much later. Thanks!

    • Veoletta Hayward says:

      Hi Beth. That’s a good question. My husband of three years is retired from the Air Force so we have good insurance. For a large part of my adult life I have not had insurance. I have just been healthy and lucky I guess.

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