How Did You Find Your First Deal And How Long Did It Take?

2 Replies

Hey guys,

I've been trying to find my first deal for way too long... How did you guys find your first rental property? 

Did you look up the properties tax records and send mail? Did you just walk into the place?  How long did it take your to find your first deal?

Looking forward to hearing your stories! 

Cody

Hi @Cody Jensen where are you looking for your first rental property? What strategies have you worked on using? You mentioned it's taken you too long. 

I got my first deal by networking a lot and letting people know what I wanted to do. After the first deal, you have more credibility and can likely have an easier time finding deals. Have you been specific with what it is you are seeking? 

@Cody Jensen

I've told this story multiple times on Bigger Pockets but it always bears repeating because it illustrates a few important things about getting into this business.

I didn't find my first rental property deal. It was handed to me by my wife. A friend of hers was preparing for a nasty divorce and needed to unload a rental property that was in his name quickly. We had 100% equity in our own house and could easily afford a home equity loan to buy this place, and the price that was being offered for a quick sale was very low for the area.

The home equity loan was approved at 3.25% interest and our loan payment was $562/month for 15 years. The property brought in $1075/month at the time. We did the deal. I have never run numbers on a property -- didn't have a clue about how to do it. All I had was a passable basic handyman background I had gained in Europe, working in apartment buildings. After we did the deal, I hired a home inspector to look at the place and he pronounced it sound. All in all, we didn't step on our cranks too badly.

OK, so:

1. Is it wise to mortgage your own home to buy a rental property? Not always, but it's also not always a bad decision.

2. Do you HAVE to be fully aware of all the metrics and calculations that go into buying properties for profit before you buy? Again, not always.

3. The best deals are always off-market deals. However you decide to structure yourself as an investor, your deal pipeline/lead pipeline should always include as many avenues to get off-market deals, in whatever economy, as you can possibly develop. The MLS of your area is not your friend, and will not unlock a royal road to riches for you.

4. Can you lose your shirt in real estate making uninformed decisions? Yes. But you can also do pretty well not knowing everything as long as you stay conservative, as long as you know you can afford to lose the money you're investing. This business does not reward geniuses or get-rich-quick systems. It rewards reasonably bright, emotionally mature, resourceful people who can make steady, sustained progress toward a goal while dealing successfully with repeated setbacks.

5. If you even for a moment think that you're going to get into self-managed landlording successfully with very little investment capital to spare and also with your spouse's not being 100% on board, you're deluded. You're just totally deluded.

Good luck to you, Cody!