Together we create create the future....
"Together we create the future"
My business partner and I are diving into real estate. We are starting this as in the forums and will blog on our journey as we go.
Now to our first potential deal ----
We just put an offer in on a property in our home town today. It is a 2 unit property. Asking price is $44,900. Our offer price is $37,000. We anticipate meeting them halfway and offering $40,000 if they don't take our initial offer. We are currently using traditional financing with 20% down.
Unit 1 - rent = $495
Unit 2 - rent = $650
Total income = $1145
Cap rate (based on our offer) is 16.4%
Cap rate (based on asking price) is still 14%
ROI = 34.41%
Picture below is from Bigger Pockets calculator:
Picture number 2 below is our own calculator at full asking price purchase: if we were to increase rent on the smaller unit our cash flow will increase (easy added value).
After walking through the property twice we see no real updates that are needed. ($0 estimated repair costs)
We are waiting to hear back from the agent if we need to counter offer.
While waiting we felt we should take this opportunity to figure out where and how your first start began. We started researching and googleing everything under the sun and found bigger pockets.... Reading the forums, listening to podcasts, reading books, and hearing the inspiring conversations really helped making our first step easy. Hopefully we can be an inspiration for others as we begin our journey.
Our goal is to make $8,000 a month minimum and have 1 million $$$ in assets in 3 years or less.
Any advice on our next step would be greatly appreciated??
How does this deal compare to your first deal?
Is this something you would have liked to have added in your starting portfolio?
How did you go from traditional financing to creative financing? (private lender, hard money, seller financing, crowd sourcing, etc...) What steps does it take???
What is your favorite way to finance properties? If you don't have capital what's the next step?
Any advice on our next step would be greatly appreciated??
Keep that momentum high and do whatever it takes to get your next deal.
How does this deal compare to your first deal?
My first deal was a 4 plex I bought using conventional mortgage 25% down and a large bank. I am never doing that again......lol
Is this something you would have liked to have added in your starting portfolio?
No. My criteria is different than yours so that isn't a bad thing.
How did you go from traditional financing to creative financing? (private lender, hard money, seller financing, crowd sourcing, etc...) What steps does it take???
It was simple I just started looking for any way where I didn't have to put 25% down again. I have done the house hack 3.5% FHA multi family. I have done the live-in flip SFR bought with a conventional 5% down mortgage, and I have negotiated two seller finance deals. I believe Bigger Pockets actually wrote a great book on the topic.
What is your favorite way to finance properties?
I would prefer to use traditional financing on everything through smaller local banks. The reasons are simple; low interest rates, 30 year amortization and far more flexibility. Since I'm not made of money I am utilizing seller financing to grow faster than would have normally been possible.
If you don't have capital what's the next step?
Get capital!!!