First Deal

I just posted a "novel" about my history. Maybe I didn't need to give that history, but it felt good getting it out.

My first deal is a Duplex. I am still within the time to pull out if there is anything wrong with it. The inspection is tomorrow. (October 18, 2013.)

After talking to the insurance agent, and having him take pictures of the property, he is convinced I need a new roof, having pointed out a few things with it. So I may go back into negotiation, either for a lower price, or to get a roof allowance to help offset the costs.

I already expect to replace the HVAC units, and it is my intent to replace the appliances, and make sure anything that the flappers on the toilets are replaced, and the shower heads are replaced with low flow shower heads.

Since both units are currently occupied, I am not going to do all this work right now, but spread it out. If a unit was empty, or about to be empty, then I would do everything all at once, plus the get ready for the new tenant.

But with the tenants living there, they obviously approve of the apartment now, and believe the profits can be used to cover these expenses, along with using credit cards, mostly to prevent me from going out of pocket as much as possible.

Using the current numbers, with expenses I believe I can reduce, it's showing a 19% profit, but only on the down payment, so it will be lower once all the costs are figured in. I already used a card for some of the costs, and will for anything else I can, even though I have the cash for it.

But by eliminating what i believe I can in the expenses, I can achieve a 27% return on this deal. Again only based on the down payment, not including any expense I can't finance out.

My first few months will be paying off the card(s) used on this property. I'll probably take the profit, subtract $100, and send the rest to the card(s).

I do feel I should have found something with some equity in it, but this is more of a psychological deal then anything. Getting that first deal under my belt, and finding something with a positive cash flow, as well as a decent return. Right now that's good enough.

My fears are still there, but I know I have enough to cover any situation.

It was annoying working with this bank. My wife is primary on the loan, and they are requiring her to sign all the documents. The fact that I have enough to pay cash for this deal, and the fact that as long as she signed the loan should be good enough. Even the Agent thinks it's BS.

I should have gone with a smaller, more local and friendly bank.

I still have the ability to pull out of this deal. I doubt I will, assuming the inspection doesn't find anything too serious. But if it does the bank may pull financing, and I am not paying cash for this deal.

We are scheduled to close on October 31st. Halloween.