How I bought my first investment property in the city.

I am currently a W2 employee. I love my job, I am very lucky, because I enjoy going to work everyday! However, just like anyone...I could get paid more. I went back to school and began my MBA,, and I stumbled across real estate investment. I eventually got onto bigger pockets youtube channel, then I began reading books, and listening to podcasts. Eventually, I got the courage to buy my first property...here is the story.

The first thing I did was find a realtor that some knowledge of investment properties. That alone could its own blog post. I was lucky to find my current agent.

I didn't have more than 10k in my savings account, and most of it was in stocks making only 4% return on them. I knew that I wasn't able to buy anything fancy with it, so I had to look at houses that were cheaper. I looked at properties in the city and was able to find a couple properties that would make sense, numbers-wise. My particular credit union wanted 25% of down payment, and they offered me 5% at a 15 year fixed Mortage. I thought this was great, because I could afford to look at properties at about 40k. I found this property listed for 29k in the heart of the city...not the best area though. The house was "move in" ready, and the bank was ready to offer me a Mortage,however the seller did not want to entertain that and instead they wanted a cash offer.

I had ran the numbers on the house and the cash-flow would be great! the property was already HUD ready, and all it really needed was a tenant. I got one of my buddies to loan me 20,000$ and with the rest of my savings I would be able to close the house. The deal with my friend was that I was going to return him his money with 10% interest after 7 months. My plan was to refinance the house once it had been seasoned, and I had a tenant in it. My cash-flow would take a hit, but I was Ok with it since I would be making money for my friend, and I would continue to have money coming in from this property.

I went ahead and placed an offer on the house for 25K, the seller came back with 26k and thats the deal we agreed. The problem was that my friend changed his mind about the deal that we had struck once he handed me the check. He wanted to be 50-50 partners in the deal and wanted to be part of the cashflow. I didn't mind, since I could afford to split the cash flow, however this put a damper in my timeline of finances. I wanted to use my cashflow from this property to buy the next one. He wants to be the silent partner and just get cash deposited to him from my cash flow. I get to keep the equity on the house, however I have to manage it (or pay someone to manage it), and I also get to borrow against it.

In this deal I learned that having a realtor with experience is worth it. I learned that anytime you are in a partnership you need to have it in a legal document.

I hope this helps! This is my first blog post, and hopefully the first of many!