Your first deal

Handyman · Alpine, UT · Member since 2009 · 46 posts · 22 votes

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

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Peter Giardini

Rental Property Investor · Baltimore, MD · Member since 2009 · 624 posts · 559 votes

16y

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.

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Nick M.
Real Estate Investor · Sterling Heights, MI · Member since 2009 · 71 posts · 14 votes
16y
Bought the house next door to me 2/1 for 15K. Put another $13K in rehab and rented for $825/month. Since then, (4 months) I have been looking for another deal but got outbid on all of my offers and looking for ways to buy my next property. MLS seems to not be the ideal place to find deals but don't know any other places to look for deals ... any thoughts are appreciated
1 Reply
Joe Dube
Real Estate Investor · Palm Harbor, FL · Member since 2009 · 79 posts · 76 votes
16y
First deal was in 2003. A Trustee got one of my direct mail pieces. He called and told me this is your lucky day. He wanted $40K for a house that was worth $142K. I put it under contract and closed on it, then sold it to my rehabber for $75K. My rehabber was ecstatic because there was only $5K to $7K to be done to shine it up. We both made $$$ $35K for me & $55K to $60K for him.
4 Reply
Greg Morris
New Albany, OH · Member since 2009 · 10 posts · 5 votes
16y
I paid $60k for my first deal. It was a 4 unit with two units rented and two needing rehab. I rehabbed the two units myslelf with minimal improvements. This was in an area that I expected to appreciate so I kept up with maintenance and kept tenants happy but did very little to improve the property. I just did enough to keep it as is and keep it rented. This was a rough area and I learned a great deal about tenants, evictions, swat raids, etc. 3 years later I sold the property for $116k in a 1031 exchange. I recall when I first went through the property, we were half way through the inspection and I told my real estate agent (im licensed now but was not at the time) that there was no way I would buy this property. It had leaking pipes, roaches, and other issues, etc. He said "well if it is okay I might recommend this proeprty to my partner and we might buy it as long as you no longer have an interest.". I decided at that time that this has to be a good property and that at some point if I wanted to do this that I needed to get off my butt and get in the game, win or lose. It turned out to be a win. There were a lot of issues including a lawsuit, but it worked out to be a good deal in the end.
4 Reply
Danny Johnson
Real Estate Investor · San Antonio, TX · Member since 2010 · 328 posts · 182 votes
16y
First deal was a burned house that I found while driving a neighborhood I was interested in investing in. I sent a postcard to the owner and they called saying they were interested in selling. The place was damaged pretty bad, but salvageable.

The problem was that they owed way more than it was worth (owed 60k and figured only worth $25k). So, on the first deal, we attempted a short sale. The bank accepted the $25k offer, but the seller, not happy about how cheap we were getting it, decided they were not going to show up at closing. :roll:

They were at least 9 months behind on payments. The bank asked if we would like to buy the note for the $25k. We did. An attorney shortly after approached us before we foreclosed and offered to buy the note for $50k. We did that also. We learned A LOT with this deal!!! He went on to fix it for around $45k in repairs and sold for around $150k.
3 Reply
Steven Horvath
Real Estate Investor · houston, TX · Member since 2009 · 77 posts · 18 votes
16y
made 12 k playin poker when i was 23-i had no documented income, and bought a 4/2/2 hud home for 82k with my partner, he ran out of money and left, i rehabbed it and rented out the 3 guest bedrooms for 300 a month apiece and i stayed in the master while i fixed it. tried to sell it couldnt, so now im 26 and kinda workin, i rent it out for 1150 a month and will try and sell it in a few years.
currently workin on gettin a private lender for the next deal
1 Reply
Mark UpdegraffBusiness Member
Real Estate Broker · Rochester, NY · Member since 2010 · 1k+ posts · 715 votes
16y
1st deal in March 2008
1050 Sq ft colonial 4 square on nice big lot
Purchase Price = 54K
Conventional w/ 10% down.
Spent March & April renovating EVERYTHNG probably spent too much on the renovations (5Kish) - had my tools stolen while doing rehab (about 8K worth, ouch, now I lug them with me ALL the time).
Has been rented ever since ($1050 / mo).
Podcast Guest on Show #112
Updegraff Group Realty4.742 Reviews
Website View Page
2 Reply
Gerald Grinter
Insurance Agent · Seattle, WA · Member since 2010 · 63 posts · 27 votes
16y
These responses are fantastic. It gives me hope to pull off my first REI. I'm selling my condo to by my first 4-Plex. I plan to live in one of the units until I find the next rental. Growing up my family had rentals and I am ready to get back in the game.
2 Reply
Craig H.
Investor · Statham, GA · Member since 2010 · 75 posts · 26 votes
16y
Bought a single family in 04 for 90k. Had no idea what I was doing and paid too much. Put 5k in rehab and rented for 895 mo. Renters left after 6 months but property was in decent shape. Rented again and they tore it up, 3k in repairs. Same thing a few more times. I would have sold it if I wasn't UPSIDE DOWN because of declining values. In 6 years I have collected maybe 15 months rent and spent every dime plus some in repairs.

About 6 months ago my Aunt told me she wanted to sell a duplex she had inherited from my grandfather for 50k. I bought it planning to put 50k max in rehab. I put 120k in rehab (!!??!!??). Well, I went all out, granite countertops, crown molding everywhere, etc. Sounds silly but near a college and getting $950 per side in rent. So not as bad as it could be.

Learned some lessons and bought a house on the lake for 67k, 20k in rehab, will rent for $1100 mo (lease signed before I could even begin rehab). Another house worth 200k bought for 55k, will have 20k in rehab, also leased before renovations started for 1050. Another one under contract closing in a week for 37k, 3k in rehab .. will rent all day long for 800 mo.

So I think maybe I am on the right road now! :-D

Craig
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Account Closed
Landlord · Seattle, WA · Member since 2010 · 3k+ posts · 1k+ votes
16y
Our first deal was a single tax lot close to downtown Seattle. We paid 60K the lot had 2 -2/1 SF houses on it. We lived in one and rented out the other. At the time 60K was a lot of money. We no longer live there the homes have been paid off for many years.

The lot is zoned multi-family and is in a desirable location, even in his economy we still get some letters from developers trying to buy the property. We plan on developing the property ourselves in the near future.
3 Reply
Dale Osborn
Mobile Home Investor · Spanaway, WA · Member since 2008 · 1k+ posts · 578 votes
16y
We started reading about investing in the 70's & 80's. Got a few single family homes free and clear in the 80's. Then got into aparttments and things started progressing from there. Most books talk about starting out with single family - moving to 4-plexes and below as all banks used to finance these then on to 5+ properties that require commercial financing. Then you go on to apartments. We are kind of glad we skipped the 4-plex stage and went straight from single family homes to apartments!
1 Reply
Scott Ouk
Real Estate Investor · Bothell, WA · Member since 2010 · 13 posts · 0 votes
16y
Bought my first property 2005 for $350K. Had tenants already living in property at time of purchase and was paying most of the mortgage ($250/mo negative cash flow). Held for six months without even seeing the inside of the property (value was in the land) sold it for %420K
0 Reply
Jon Klaus
Developer · Garland, TX · Member since 2008 · 8k+ posts · 4k+ votes
16y
"My take after closing: $62K. "

Fantastic for a first deal. More than most people earn in a year. Good job.
0 Reply
Jon Klaus
Developer · Garland, TX · Member since 2008 · 8k+ posts · 4k+ votes
16y
Originally posted by John Chan:
I got lucky on my first deal, it was a 3 family in a lower income area in Cincinnati. Owner lost it due to foreclosure while in later stages of finishing rehab. I picked it up from the bank for 18k, put 3k in improvements, and rented it out for $1,450 a month total.

Another fantastic first deal. I'm up to 20+ deals and I still haven't done one that good. Did you ever top it? Congrats?
1 Reply
Jon Klaus
Developer · Garland, TX · Member since 2008 · 8k+ posts · 4k+ votes
16y
Originally posted by Greg Morris:
I paid $60k for my first deal. It was a 4 unit with two units rented and two needing rehab. I rehabbed the two units myslelf with minimal improvements. This was in an area that I expected to appreciate so I kept up with maintenance and kept tenants happy but did very little to improve the property. I just did enough to keep it as is and keep it rented. This was a rough area and I learned a great deal about tenants, evictions, swat raids, etc. 3 years later I sold the property for $116k in a 1031 exchange. I recall when I first went through the property, we were half way through the inspection and I told my real estate agent (im licensed now but was not at the time) that there was no way I would buy this property. It had leaking pipes, roaches, and other issues, etc. He said "well if it is okay I might recommend this proeprty to my partner and we might buy it as long as you no longer have an interest.". I decided at that time that this has to be a good property and that at some point if I wanted to do this that I needed to get off my butt and get in the game, win or lose. It turned out to be a win. There were a lot of issues including a lawsuit, but it worked out to be a good deal in the end.

Tricky sales technique:

"He said "well if it is okay I might recommend this property to my partner and we might buy it as long as you no longer have an interest."

Another great job on a first deal!
2 Reply
Jon Klaus
Developer · Garland, TX · Member since 2008 · 8k+ posts · 4k+ votes
16y
Originally posted by Steven Horvath:
made 12 k playin poker when i was 23-i had no documented income, and bought a 4/2/2 hud home for 82k with my partner, he ran out of money and left, i rehabbed it and rented out the 3 guest bedrooms for 300 a month apiece and i stayed in the master while i fixed it. tried to sell it couldnt, so now im 26 and kinda workin, i rent it out for 1150 a month and will try and sell it in a few years.
currently workin on gettin a private lender for the next deal

Steven, you are the 2nd BP member I know of that got started with a gambling win. Newbies (and everyone else), don't try this at home. :D
0 Reply
Jon Klaus
Developer · Garland, TX · Member since 2008 · 8k+ posts · 4k+ votes
16y
Originally posted by Realtyman:
We started reading about investing in the 70's & 80's. Got a few single family homes free and clear in the 80's. Then got into aparttments and things started progressing from there. Most books talk about starting out with single family - moving to 4-plexes and below as all banks used to finance these then on to 5+ properties that require commercial financing. Then you go on to apartments. We are kind of glad we skipped the 4-plex stage and went straight from single family homes to apartments!

I agree (didn't always) with skipping over 4-plexes. They are too often overpriced.
I'm enjoying your blog here on BP!
0 Reply
Brandon Church
Real Estate Investor · Lewisville, TX · Member since 2010 · 3 posts · 1 vote
16y
I found a home in Dallas, Tx owned by a divorcing couple. It was a 3/1/1 brick around 1100sf. I heard from a mutual friend that they were planning on taking an offer of 25k from a "we buy ugly houses" company. I swooped in and offered 30k verbally. They accepted.

My wife and I bought it with an FHA loan. It was pretty gross. (owners had moved away and their young son lived there for several years) I started doing repairs myself, but after a few months we scraped together enough cash to hire it out.

We put about 12k in renovations putting us in the house for just under 45k.

We just sold the house for 93k and close in August.

I am still trying to plan my next move. We lived in this one while we fixed it up. We purchased in Nov of 2009.

I don't think we want to live in the next flip. I'm currently trying to learn all I can about Hard Money Lenders to see if that's the route I want to go.
1 Reply
Belinda H
Real Estate Investor · Atlanta, GA · Member since 2010 · 20 posts · 6 votes
16y
My first property was a HUD home 3bdrm, 2.5 bth built in 2002 townhome. Listed for 51k, my agent suggested I offer 40k since there were no other offers and it had been listed for a few weeks. I got it on the first try, I did about 3k worth of repairs (basically painting and carpet) and it rented in less than two months. Cash flow after paying the note, $350.
0 Reply
Tracy Caywood
Specialist · Jacksonville Beach, FL · Member since 2008 · 39 posts · 41 votes
16y
Yes, this is a great sticky topic!! My first deal was a complete ghetto fabulous duplex stuck right in the middle of bullets flying. I got the lead from mailing postcards to homeowners who had code violations.

Long story short....I got the property under contract for $23k Cash. I flipped it to a cash buyer for $26k. We closed the deal within 2 weeks at an attorney's office (who is now in PRISON for Mortgage Fraud) -

It was the happiest day of my life. I had validation that this worked- and I've been flipping em ever since. That was in 1999.
2 Reply
Bob Yon
Real Estate Investor · Salisbury, NC · Member since 2010 · 67 posts · 16 votes
16y
My first "intentional" investment deal was a property that some one at our local REI club was promoting. A 2/1 that I bought for $20k and plan to rent for about $700/month.

I am also working on buying 2 other properties: 1 is a 4/1 REO that I am buying for $23k and already have a renter for $400/month. The reason I am renting so cheap is they are "giving" me their current home on a sub-to deal. Loan is $85k, repairs needed are about $12k - $15k and ARV is $120k - $130K.
0 Reply
Charles Smith
Property Manager · Chicago, IL · Member since 2010 · 44 posts · 3 votes
16y
I am in the process of doing my first deal,and it
will serve as owner occupied investment.How-
-ever i stress that please do due diligence we
cannot afford a short fall from the beginning.In
searching the records of a major city i found
that they had no record of the property at all.I
would like to know if anyone has heard of a
similiar circumstance?
0 Reply
Dan Milinazzo
Pelham, NH · Member since 2010 · 91 posts · 51 votes
15y
My first deal was pretty conventional. I picked up a short sale duplex in a relatively good neighborhood. It is the "ugly" house on the block, but not too bad. Currently O/O bringing in rent for the first unit at 60% of the PITI [and pmi unfortunately] (easily worth 75%, but I was bleeding money after sitting empty for 4 months.) currently searching for some wholesale opportunities so I can finish the exterior curb appeal and move out of the second unit into a SFR with my family and let the property cash flow me into the next deal. I expect $700/mo cashflow once I move on. Not a homerun, but its a start.
0 Reply
Jad Allen
Investor · Groves, TX · Member since 2009 · 44 posts · 25 votes
15y
Bought my 1st house in 08 a 3/1/1. I paid 76,600 (bought off Mls using an agent) and financed 62,000 for a note (including taxes & insurance) of 600 a month. After putting in $4000 in repairs I am have been renting it out for $975/month.

I am happy with this house because it finally got me 'off the couch'. In the time since buying this house (and the 2 since then) I have learned a lot.
0 Reply
John Hall
Member since 2010 · 2 posts · 0 votes
15y
We are in the process of closing our first rental investment. I'll keep you posted...
0 Reply
Stefan Forsberg
Real Estate Investor · Garland, TX · Member since 2010 · 86 posts · 34 votes
15y
alright first deal. Late fall of 08, picked up a 3/1/1 in a decent lower middle class income neighborhood. paid 50K, put about 9K in repairs (did them all myself which took too long but I learned a lot), used hard money for purchase and repair (don't remember the terms now), refinanced and rented out in the summer of 09, same tenant lived there ever since and has verbally committed to 3 more years. Cash-flow (after using the 50% rule) is $198 per month, not a home-run but a solid deal. Property now appraises at 95K which means I have close to 45% equity. 15 year note, if the tenant stays 3 more years, she's paid of 33% of my mortgage, I keep hoping to find two more tenants like her :)

//Stefan
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