Jon K., I did read your original text post in this thread on your first deal and I knew the use of that profit. I thought it was Josh but obviously your older son. I was not making fun but what a great a use to put the very first RE profit into.
Ah, gotcha now Bala ; )
I'm actually getting ready to watch Josh spar at a Taekwondo tournament right now.
Ok, back to first investments.
Jon Klaus, SellPropertyFast | [email protected] | 214‑929‑6545
I think I got pretty lucky with my first deal. While I was searching to purchase my first home (primary) I ran into some VA foreclosures. I knew that I would only be living in my home less than a year before renting it out so I bought a VA Vendee property. I learned that you only needed 5% down for non-owner occupied homes so I got preapproved and went shopping for a second vendee property.
After being outbidded by cash investors several times I bought my first official investment property (2nd home) September 2011:
$45K, 3/2 only 1000sqft but sits on 2 acres of land. We put $5K into it and in less than a month it rented out for $825 with a $325 mortgage/ins/taxes.
Since then I picked up another vendee property and have moved out of my home and all three are renting with positve cash flow.
Bought my first home in 2006 with the intention of renting it after several years of living in it and building my nest egg back up. Paid 141,000 for a single family 1690 sqft three bed two bath in a nice subdivision. I did a 80/10/10 to avoid PMI. Spent five years living in that home making it a nice place for my wife and I to live. We finally took the plunge this past December and bought another home and turned our primary into the rental with the intention of doing the same thing to our new home in another year. We were picky on our tenants and couldn't ask for better people to have renting from us. After PITI we net about $250 a month. I'm in the process of refinancing right now to a fifteen year note because the average on the two notes was 6.35% and I can trim 9 years off the mortgage and pay only 12 dollars more than I currently pay on my thirty year.
Lessons learned so far.
1. Don't go overboard on what you put in a home. Travertine tile and sile stone countertops were probably just a little over the top. Formica and ceramics going in the new one.
2. Have the home ready to rent and on the maket when you submit a offer on a new home. I lost two months of income from the house because there were a few projects that I need to finish before I would let anyone move in.
3. Fortune favors the bold. When I bought my first house I wanted to be out and on to my next one in two years. Five years later I was still there. I let my own fear and the media stun me into paralysis instead of looking at the numbers. This new home 1 to 1 1/2 years tops. Besides money is just to cheap to pass up right now.
@Todd Keith ,
Hello Todd, welcome to the forum.
Here is a link, to a discussion, that I suggest you read, to use a GUIDE, with rental properties.
My first deal was boring triplex bought it from my father second deal was my personal home. Also boring , but this summer I bought a home to rentat about fair market value payed 165k. 32k down 20% to avoid cmhc fees and it pulls in 500/months after expenses and pays down the mortgage by about 300 a month, but the interesting part was the fact it was on a double size lot, two days after I got the key I was applying to devide the lot , because I found a buitiful house that was going to be sold or demolished. So I bought it for 1000$. And moved it onto my new lot, build a new foundation/ basement my total cost was 140 k for the project but the house is worth 225k it's currently rented and brings in about the same money as the first house 500/ month plus 350 paying down on the mortgage after expenses I wish I could post pictures
I had just turned 19 and had no clue what I was doing, I just wanted to move out of my parents' house. I found a condo I liked, it had an awesome view and was a little 2 bedroom, 1 bathroom on the fourth floor of a 12-story building.
In hindsight, the agent I used was terrible. I don't even know how I picked her, she must have been the listing agent. I had no clue what I was doing and she didn't explain anything, again, I was a naive 19 year old. She just flung papers at me and told me where to sign and that's what I did.
At the time I bought, our market was in the middle of bidding wars, I ended up paying $8000 over listing price because I wanted it quite badly, I think I was up against three other offers. Earlier in the year that same condo would have probably had 20+ offers on it.
I got started when a foreclosure notice got taped to the house next door. We live in a
historic neighborhood, row homes only feet from each other...so the notice was hard to miss. Hadn't know the couple next door very well, but had been over a few times to know the house was really great, just needed a good cleaning and some fresh paint and carpet. The couple divorced, both moved out and couldn't agree on accepting the offers that came in...and ended up getting foreclosed on instead. Oooof. But I digress.
Because I was friendly with the local real estate agent, (he was my agent when I bought in the neighborhood) I knew there had been several offers in the $279K range. I researched the local foreclosure auction process, borrowed money from family, and quite happily bid up to my limit of $199K...(my best homework at the time, I thought that gave me a great margin and enough room to cope with any potential hidden issues). I was aggravated beyond belief when some guy in a suit outbid me. Jerk.
I was crushed, but hung around to speak to the winning bidder. After all, he might be my new next door neighbor! Turns out he was the attorney for the foreclosing bank. We chatted, and he offered to "assign the winning bid" to me at my last offer of $199 (he won at $204). We came to agreement quickly and it was mine for $199. This bit, I truly don't get and would appreciate the help of vets out there - is the bank attorney mostly looking to cover their outstanding principle on the foreclosed loan? Seems in my state almost all foreclosure auctions are won by the bank attorneys?
So bottom line, paid $199K, spent $5K on some minor fix ups, ended up it sold it for $299K. Hooked! This was in 2007 though, the house today has probably dropped to $250K or so in value. Only 2 awkward over the fence chats about home values with the nice people who bought it from me.
Originally posted by Tim W.:
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 [b][i]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.
Found a bank owned house that was trashed in a very good neighborhood. Bought it for $14,500 and the lot next to it(due to property line issues) for $1,500 put about $29,000(with commision/holding costs) and 5 months into the rehab. Sold it above asking price for $67,500 with DOM being 1.
My 1st deal was in fall of 2003. It was on the other side of town. I was so excited I didn't care that it took 45 mins to drive there. The sellers were a couple who were divorcing. The husbands sister saw one of my bandit signs and passed the number to him.
I met them wearing a suit(lol). They agreed to sell for what they owed. I had a Purchase and Sales Agreement signed on the spot and an authorization to release. I faxed the agreement to a title company to check title. The property was in bad condition but I tried to sell retail.
I marketed in the Houston Chronicle for sale but listed the wrong area. I received a lot of calls but no deal when they found out where it was.
I had an agreement after 3 months but it fell through when his lender did an appraisal. I then decided to short sale it. I didn't know how but fumbled through it.
I had a sign in front and stumbled around and short saled the property after 7 months in total and barely made a profit.
I learned so much from that 1st deal. From the BPO to flaky buyers to difficult sellers signing releases on liens.
Experience is a great teacher
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