The real estate market has been very good to Leon and Terri Keesee. Just in their 30s, the couple has amassed a level of wealth that many people never see in their lifetime. Their assets total $2.2 million with more than $292,000 in equity investments.
There’s the six-bedroom primary residence in Yorktown, Virginia, bought three years ago at $370,000 and now worth about $600,000. The couple has a second home and six other rental properties. They also own eight acres in Gloucester, Virginia.
Leon contends that he ripped a page from his father’s playbook. “Dad was into real estate. He laid the foundation.” Leon inherited the home he grew up in and two rental properties when his father died in 1999. Those properties, bought decades ago for around $30,000, appreciated five times that amount. Leon was able to get a bridge loan on the first home (which he sold soon after) and used that money to build the house in which his family currently resides. He was also able to get home equity lines of credit based on the value of the two inherited rental properties (about 80% of $150,000 each), which were used to pay off the existing mortgages and to purchase his fourth and fifth homes. The Keesees continued to parlay the equity in their homes, putting 20% down payments on their next two rental properties. Says Leon, “We are using the equity in our homes to buy new properties and using the renters to pay off the loans and to pay down the mortgages.”
Outside of $877,000 in mortgages, the duo’s only other debt is $1,600 on a credit card. Leon earns $91,500 as a pharmaceutical sales representative and $12,000 as a battalion staff officer in the Army Reserves. Terri earns $46,500 as a crisis counselor for a local school district.
The couple has concerns. Leon, 36, wants to protect their real estate investments, while Terri, 34, wants to do more outside of the investments in her employer-sponsored plan. Then there’s the matter of education for their children, 14-year-old Krystin and 4-year-old Christopher. Though the Keesees have $23,000 in a Virginia Prepaid Education plan set aside for Krystin, it will cover tuition only. There’s $11,000 in a 529 plan earmarked for Christopher.
The husband and wife team know there is still work to do.
BLACK ENTERPRISE paired the Keesees with Danny Freeman, a financial adviser with Darda Wealth Management in Winston-Salem, North Carolina. Freeman is quick to point out that the couple is overexposed to real estate.
“The Keesees are at risk for extended periods of low appreciation, or worse, price declines. If this happens, they may find that the long-term rate of return on their real estate portfolio is below an acceptable level needed to meet their long-term goals,” he explains. Freeman adds that the couple’s cash reserves are too low. “If several of their rental properties were vacant at one time, they would be forced to make mortgage payments and cover other related expenses until they could locate new tenants.”