It seems like starting out is probably the toughest part of REI. So many fail to ever follow through with their plans.
I wanna hear about your very first deal no matter how big or small, good or bad. Go into as much detail as you can, it will really help us rookies out. :D
Small 2 bed 1 bath 720 sqft brick house, central heating., simple house. Paid $24,000. spent way to much remodeling and made it way to nice for the area and the first renters trashed it. Spent 6 months remodeling it myself, around $8k in materials. Currently still own house, has been a great rental every since. currently rented at $500/mo. Not the best deal, but not a bad deal for my first deal!
How did you pay for it?
What is it worth today?
Thanks, sounds like you learned some valuable lessons!
Ran point on a 13 unit apartment building that I developed. Bought two lots for cheap and combined them. Had to take on partners to qualify for the construction loan but we put together the pro formas, plans, and pulled permits. Building it was a pain in the butt because it was my first commercial project and it took longer than it should have. We finished it and rented it out. That thing was a cash cow. Although it's someone else's cash cow now.
Thats one heck of a first deal!
What was your total cost?
Was working with a Realtor to buy a SFR. She called me late one Friday and said she had a good one that we went to look at. It was a 4-2 with an in-ground swimming pool that backed up to IH635, the loop around Dallas. It started at $70K, and languished. They dropped it to $59K, and a week or so later dropped it to $49K. That's when we looked on the Friday evening.
We immediately wrote an offer for $48K and they accepted. It had an FHA non-qualifying assumable loan for $36K which I assumed. I had a few $K and borrowed the rest of the DP from my brother and sister.
I sold it on a wraparound mortgage for low 70's after reading Wade Cook's book Real Estate Money Machine. Those buyers defaulted after a year or so and a divorce. They deeded it back to me so I didn't have to foreclose.
I then rehabbed it and sold it for $72K on a new FHA mortgage. I used the profit to pay for a high risk pregnancy and birth for my son,15 years old now.
I had just moved to Chicago from Boston and did the math and realized I handed some clown in Boston about 20 grand for the privilege of living in their basement for 2 years. I decided to be on the other side of this action.
I bought a 2 flat in Lyons, IL for $205,000 in 2005. I lived in the downstairs unit and rented out the upstairs for $650 a month. Clearly not a cash flow king but I got addicted to getting rent checks every month. It was like another person was working an extra week each month and giving me their paycheck. I sold the property in 2007 for $245,000.00. Can't replicate that in this current market but it taught me a couple lessons and lessened my fear of investing.
Great topic, John! I made this one a sticky.
Originally posted by John Williams:
Thats one heck of a first deal!
What was your total cost?
Soft and hard costs = 1.2M. The deal was in the land. We bought two 9,000 sq ft lots with tear downs on them in a strong rental area of Los Angeles for 100k apiece.
So crazy how 100k for a lot in rental area is cheap, plus you still had the demo! and thats was the best part of the deal!
I bought my first property for $36,000, a duplex in Atlanta. I bought the place with a no-credit-check, hard money loan at 10pts/18% interest; yeah, I know! The duplex was already occupied, so I had immediate monthly income to pay my note. While putting on a new roof and painting the house, a lady from across the street who managed a rooming house had come over to me and said she wished I could do that to her house. I said give me the name and number of your landlord. Within two weeks, I had seven rooming houses under contract. I wholesaled all seven. I sold the duplex about a year later and never held another property. It takes a certain breed to be a landlord, and I ainâ€™t one of â€˜em!
Worked my butt off through high school and college. Graduated college bought a 2 bed 1 bath for $30,000, put $8,000 in it. 1.5 years later I still own it with the same renters at $600. I just now found my second deal after months of searching. The great thing about this deal, it's a package of 5 homes.
Sat in a room of 30 other investors when this 23 year old kid presents an 8 property 10 unit deal... gross cashflow of $4700 a month. Asking price $280K which included his $50K wholesale fee. I had the deposit check filled out before he finished talking.
Financed it conventionally (only deal I ever did that way). Appraised for $453K. Took that $173K of equity to a bank and cross-collateralized it into a $500K line of credit.
Upside managed the 10 units to where they were generating over $10K per month in gross rents.
Sold everything in 2006 for over $1.2Million.
Bought my first home about 9 yrs ago 180K lived in it for 2 yrs rented it for a yr and sold it for 385K 2nd home bought for 185K lived in it for a yr have had it rented for 6yrs renter is paying for it 3rd house bought for 98K bank aprased for 120k renters pay the mortgage for past 11 months 4th home bought about 2 months ago paid 72k rents for 925 month positive cash flow of 200 a month after all expenses hope to only buy positive cash flow homes from here on out hope to buy 2 to 4 home a year for 5 years then pay them all off in the next 5 years will see it it happens
Paid 8k for a duplex, 18k to rehab, appraised for 85k, currently rented for $1030, its been one of the best rentals I have.
Purchase a 3/2 House for 97K in 2002 that I was able to convert to a 4/2 and rent for 1,100. Sold the property in late 2006 for 265K and 1031 Exchange the money into a 18 unit apartment building.
My first house was a HUD home. I went through the bidding process to buy a cape cod home that was on the market for 148K. It was in 2002 when the market was hot for sellers. By the time I came across this property I had already been door knocking, sheriff sales, sent out preforeclosure letters and gave many offers on REO properties. I was annoyed by the time this cape came along! I put a bid in for 180K, spent 20K to fix it up and sold it for 260K. WasnÃÂ¢Ã¢ÂÂ¬Ã¢ÂÂ¢t a bad dealÃÂ¢Ã¢ÂÂ¬ÃÂ¦and as you said the first deal always seem like the hardest but stay persistentÃÂ¢Ã¢ÂÂ¬ÃÂ¦it will happen!
Does a primary residence count? I coached my girlfriend (now wife) to buy a 1800 square foot house in Redondo Beach for $599,000 with 10% down in 2003. We sold it 25 months later for $799,000 with about $10,000 in upgrades. We rented for about 18 months, then purchased an REO in Palos Verdes that was about $200,000 below market value. We've lost most of that equity with the value decline but are not upside down yet. I'm looking for my first strictly business deal now.
Bought a duplex in Northern VA for $800K in August, which is currently my primary residence. Other side renting for $3200-- whole thing was renting for $6800.
In the process of remodeling with my brothers- including converting a kitchen in our side to an additional bedroom. Will live in it for another 6-8 months.
Fully rented should get around $7000-7200 with the extra bedroom.
In the process of closing on duplex in Binghamton NY. Purchase price of $94K, fully rented for $1750/mo.
First deal was in 1996: two side-by-side duplexes that needed a ton of work. I bought them with seller financing for $35K...I still own those properties. They make me great cash flow - total rent is about $1600 per month.
But the most valuable thing I got from that was definitely the experience and a start for my business...
Get that first deal under your belt!
Hi, 1974 a 3/1. I bugged my landlord to give me an option to buy as I wanted to do alot of improvements. First kitchen renovation I ever did. It was also the cheapest house in the neighborhood, as luck would have it since I didn't even consider marketablity, it was to be a home. After the reno, a larger ranch went up for sale two blocks away, put an offer on it with my VA and leased out my first deal. My advice, don't fall in love with a car or a house, move on. Bill
For alot of first timers, emotion can play a big part in that first deal. It is somthing to watch out for when moving forward as it can cloud sound business sense.
Still completing my first deal on a 5 unit in upstate NY (Jamestown).
Gross rent 25k per annum, price 50k - rehab costs of about 10k.
Back in days of No Doc; SISA Loans - pulled off several simultaneous closings.
My first transaction was a distressed homeowner selling his property for 240K. Appraised value in neighborhood was $380K.
Wrote up purchase & sale agreement for 240K with an assignment clause inserted. We (my partner and I) had endbuyer who absolutely loved the home & was willing to pay full market value (380K).
Endbuyers credit was immaculate. So compliance (prequal, preapproval) was no problem.
At that time the credit market was extremely hot, it was only taking 2, maybe 2 1/2 weeks to close deals.
That's exactly what transpired on this transaction. After 2 weeks, closing docs came from the lender; docs were signed in escrow; and funds were released to buyer, seller, and brokers involved.
My take after closing: $62K.
My first deal was a combination of two houses in nor Cal in 2001. Bought the first for 160k with a 100% VA loan through an affordable housing program. Took the builder a year to finally build it. Finally moved in and found another new house a block away. I couldn't qualify for it too, so we used my girl friends credit and my $5k down payment. Rented the first place for enough to cover the mortgage and expenses. Lived in the second for a year and sold it for a 40k profit which we split. Moved back to the first house for another year and then sold it for 340k. Wish I could see a market like that again.
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