First Time Investor: Cleveland, OH - Making The Leap

[Brian Klik]

Hello, everyone!

My name is Brian and I'm new to BiggerPockets. I'm also a rookie when it comes to Real Estate and in the process of acquiring my first investment property alongside my fiancee in our local region of Cleveland, OH. I didn't want to dive into Real Estate blindly so for the past 6+ months I've been gaining as much knowledge on the profession as possible. After all, opportunity meets preparation (or vice versa). The opportunity is soon to fall right into my lap. My grandmother is getting up in age and is soon to move into my aunts house to enjoy the remainder of her life as stress free as possible. And in this process my grandmother offered to sell me her three bedroom one bath single family in a suburb outside of Cleveland. $40k is the price she offered to sell it to me for and it's already in livable condition alongside a new roof, new windows, new furnace, and remodeled bathroom. I've checked comps around the neighborhood and although they're a little nicer in terms of renovations, I've noticed the average selling price ranges from $100k-$110k and rent ranges anywhere from $900-$1,000. I'm leaning more towards making it a long term rental as opposed to selling the property to acquire some sort of cash flow. And depending on what renovations I decide to take on I feel as if my ROI will be fairly high. Just looking for any beginner tips, advice, or any comments in general anyone may have as I begin the process of buying my first investment property and making small renovations to maximize my profit. Thanks, everyone!

Brian

[Don Petrasek]

@Brian Klik sounds like you are in an ideal position to get started in real estate.  I would recommend setting an “all in” threshold $ amount that will result in cashflow + at least 30% equity when you’re done....then working backwards from that.  So for example if you decide $65K is the all in number that works, you owe your grandmother $40K (probably a little more than that as you should also pay her closing costs for her since she’s giving you such a great deal) - you’ve got $25K left to cover all the renovations and costs.  Then you decide how to best put $25K to work....kitchen is probably where I’d start depending on the condition of the rest of the house. 

PM me if you want some help figuring it out.