Buying my first investment , property some advice?

Buying my first investment , property some advice?

Philadelphia, PA · Member since 2016 · 16 posts · 4 votes
Hey all! So I just signed contract for my very first investment property in the north philadelphia area near and around the temple university area. I bought it extremely cheap for cash but it’s a 3 bed 1 bath shell and needs a complete rehab. I want to use the buy and hold strategy. I’d like to do what work I can on my own and contract the rest to what I cannot do. I’d just like some advice this being my first move after reading and learning for a few years it’s a very big leap for me. I paid $6400 for the house, rents in the area are typically $1200-1500 a month, House is a complete shell and has some Structural damage from a tree falling on it towards the back. I want to use my 18 month interest free credit cards to pay for the rehab and cash out refi to pay those off after the job is complete, place either a college student(s) in the home or rent to section 8 tenants once everything is complete. Does it sound like my plan is realistic and Feasible? What strategies would you use and or what would you do different? Any advice or Constructive Criticism will be taken into account and thank you all so much in advance!
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Realtor · Philadelphia, PA · Member since 2016 · 45 posts · 29 votes
7y

@Mike Sands I would probably say working with a hard money lender would be a good idea, but that may also be tough with this being your first deal.

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  • Realtor · Philadelphia, PA · Member since 2016 · 45 posts · 29 votes
    7y

    Hi @Mike Sands

    To me, it seems like this is going to be a costly rehab (50-100k) with it being a shell + structural damage. Having enough available credit, solely on credit cards, to cover the whole job seems out of reach to someone like me. 

    With that said, congrats on taking action!

  • Philadelphia, PA · Member since 2016 · 16 posts · 4 votes
    7y
    @Jeremy Fisher hey! Thank you for the feedback!! And yes I agree it does seem a little out of reach, as far as funding the rehab, what other suggestions would you have?
  • Realtor · Philadelphia, PA · Member since 2016 · 45 posts · 29 votes
    7y

    @Mike Sands I would probably say working with a hard money lender would be a good idea, but that may also be tough with this being your first deal.

  • Philadelphia, PA · Member since 2016 · 16 posts · 4 votes
    7y
    @Jeremy Fisher thank you!! I’ll keep digging !
  • Philadelphia, PA · Member since 2017 · 364 posts · 109 votes
    7y
    Originally posted by @Mike Sands:
    @Jeremy Fisher thank you!! I’ll keep digging !

    If you own a primary residence you could take a HELOC with interest only rate.

  • Renter · Las Vegas, NV · Member since 2018 · 278 posts · 71 votes
    7y

    I would recommend building up at least a 720 or 750 or 800 FICO for free

    as soon as possible so that you can open the most financing doors

    anytime during this project and beyond.

    Another option if you are bootstrapping is to use bank bonuses

    to get free cash and start a LLC to build business credit

    that can help you get much higher limits

    at places like Lowe's, Home Depot, etc.

    Google any of the following for free help:

    Bank/Credit Card Cash Bonuses

    CreditBoards business credit

    CreditKarma free credit reports

    Home Depot/Lowe's business credit card

  • Corby GoadeBusiness Member
    Investor · Boise, ID · Member since 2014 · 3k+ posts · 3k+ votes
    7y

    Yikes- I would not fund a rehab on credit cards. So much can go wrong- major repair items that you've missed, the market can soften, vacancies, inability to refi, etc. There are other ways to fund this type of deal, but if you don't have access to or know of them, I'd slow down, get to some REI meetings in your area and learn more about this process. Maybe bring an experienced partner on. I know it's exciting to jump in to investing, but your first deal is critical- it can make or break you. It's risky enough to take on a major rehab as your first investment, I wouldn't stoke that fire with a bunch of credit card debt. Slow down a bit and network with local investors, find a mentor and get yourself a killer deal that you can tackle within reason. Good luck!

  • Investor · Palm Bay, FL · Member since 2014 · 49 posts · 25 votes
    7y

    I would suggest flipping  the property to an investor with more money and experience in rehab work. Or find a partner. Rehab construction is a game of resources. You need a lot of them. Just go to a local real estate investors meeting. There will be lots of buyers there

  • Georgetown, TX · Member since 2017 · 27 posts · 23 votes
    7y

    You could partner with a more experienced real estate investor and see if they can come up with more unique ideas for your particular situation. Have you received quotes on how much it will be to fix? What about the items you would like to do yourself?  With those numbers, you will know how much you will be spending ballpark. Remember construction always seems to take twice as long as it should.

  • Rental Property Investor · Austin, TX · Member since 2015 · 280 posts · 176 votes
    7y

    @Mike Sands Honestly, I do not see this being a good, opportunistic BRRRR project unless it appraises for $162k ([$64k cost + $50k rehab] divided by 0.7) Also, the rents would not justify holding this as a rental property as they would not be near the 1% rule. If you can get $162k or more on a $50k rehab, then this is a better flip project than a rental. Best of luck.

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