All
Members
Companies
Blog
Forums
Podcast
Webinars
    User Log in  /  Sign up
  • Forums
    Newest Posts Trending Discussions Followed Forums Real Estate News & Current Events General Landlording & Rental Properties Buying & Selling Real Estate Deal Analysis See All
  • Education

    Read

    BiggerPockets Blog BPInsights: Expert Analysis Guides Glossary Reviews Member Blogs

    Watch

    Webinars Video Library Financial Independence Blueprint Intro to Real Estate: Rentals

    Listen

    BiggerPockets Real Estate Podcast BiggerPockets Money Podcast BiggerPockets Business Podcast Real Estate Rookie Podcast Daily Podcast (Audio Blog)

    Topics

    Business Operations Finance Finding Deals Property Management Property Types Strategy
  • Network

    Recommended Vendors

    Real Estate Agents Mortgage Lenders Hard Money Lenders Insurance Contractors Investment Companies Build Your Team

    Search

    Members Events Jobs
  • Tools

    Calculators

    Rental Property Fix and Flip BRRRR Rehab Estimator
    Wholesaling Mortgage Payment 70% Rule Airbnb

    Services

    BPInsights: Property Insights Tenant Screening Property Management Lease Agreement Packages

    New Feature

    BPInsights (beta)

    Quickly analyze a property address or ZIP Code to compare your rent in your neighborhood.

    Analyze a property
  • Find Deals
    Real Estate Listings Find Foreclosures External Link Ads, Jobs, and Other
  • Bookstore

    Real Estate Books

    Profit Like The Pros Bidding to Buy See all books

    Featured Book

    BiggerPockets Wealth Magazine book cover
    BiggerPockets Wealth Magazine

    Written by financial journalists and data scientists, get 60+ pages of newsworthy content, expert-driven advice, and data-backed research written in a clear way to help you navigate your tough investment decisions in an ever-changing financial climate! Subscribe today and get the Oct/Nov issue delivered to your door!

    Get the Magazine
  • Pricing
Log In Sign up
User
Quick search links
Podcast Hard Money Lenders Books Washington
ForumsArrowStarting OutArrowNervous about First Deal
  • Newest Posts
    • Newest Posts
    • Unanswered Discussions
  • Trending
    • Top Discussions
    • Trending Discussions
  • Browse Forums
Search Nova
Create post

Nervous about First Deal

20 Replies

  • Share on Facebook
  • Share on Twitter
  • Share on LinkedIn
Rotate Log in or sign up to reply
user profile avatar
  • Posts 14
  • Votes 16

Danni Green
New to Real Estate from East Chicago IN / Fort Wayne, IN

posted 23 days ago

Hey People, 

I am pretty new to real estate investing. Just a little tiny background on me is that I'm 22 years old, new grad working as a Automation/Robotics Engineer. My family has a real estate business so while I am new to real estate investing myself, I know a lot about the business/ the market/ what needs to be done & what needs to be avoided. 

I'm investing in my first property. It's really cheap (20k paid for in cash) needs an estimated 25k in repairs and estimated home value after repairs is $60k, it can also rent for $750 or more once done. It is in the area I grew up in so my family is going to be a huge help assisting in hiring of the contractors and making sure everything goes smoothly. 

I'm just really nervous though. I keep thinking what if I made a bad deal... My original plan was to buy a multi family unit and house hack in the town I'm working in, but a couple of people advised me not to miss out on this deal. It took a bit to save up for my cash purchase on this house and it was supposed to be used for my original goal. But this is the way things are moving and I'm just overthinking.  *sighs*

Any advice or similar stories? I am new here btw so excuse me if I am posting in the wrong thread.

BTW (might be informational, might not): I just signed the purchase agreement yesterday, but just waiting on seller to sign their portion. 

Rotate Log in or sign up to reply
user profile avatar
  • Posts 245
  • Votes 146

Carl Millsap
Investor from Midwest

replied 22 days ago

@Danni Green congratulations. Things don't always go as planned, when opportunity presents itself take it.

1. The benefit of your deal is you'll be into a property for less than it's worth. Once you complete the renovations refinance it for 80% of the value which is $48k. 

a. You'll get back your initial investment $20K and the money for your renovations $25k. Now you're into the deal for no money.

b. Take the $48K from the refinance, invest in the multi-family you want to house hack.

2. I imagine you'll have a positive cashflow of a couple hundred dollars once the place is renovated and rented. Again, not a bad thing to have. Put it away for maintenance issues. 

3. Thank the people who recommended you jump on this opportunity. You are the average of the 5 people you spend the most time with, sounds like you have a good group.

4. Rinse and repeat this process. 

Good Luck!

Rotate Log in or sign up to reply
user profile avatar
  • Posts 858
  • Votes 794

Peter M.
Rental Property Investor from DFW, TX

replied 22 days ago

@Danni Green Congrats on your first deal! It sounds like you've got a great support network and if they are all telling you its a good deal, most likely it is. There's no doubt you will encounter problems and your fear will bubble to the surface but you just have to persevere through it. RE is a good investment and most likely in 5 years you will look back and laugh at how worried you were now that the property is worth 25-50% more.

Rotate Log in or sign up to reply
user profile avatar
  • Posts 14
  • Votes 16

Danni Green
New to Real Estate from East Chicago IN / Fort Wayne, IN

replied 22 days ago
Originally posted by @Carl Millsap :

@Danni Green congratulations. Things don't always go as planned, when opportunity presents itself take it.

1. The benefit of your deal is you'll be into a property for less than it's worth. Once you complete the renovations refinance it for 80% of the value which is $48k. 

a. You'll get back your initial investment $20K and the money for your renovations $25k. Now you're into the deal for no money.

b. Take the $48K from the refinance, invest in the multi-family you want to house hack.

2. I imagine you'll have a positive cashflow of a couple hundred dollars once the place is renovated and rented. Again, not a bad thing to have. Put it away for maintenance issues. 

3. Thank the people who recommended you jump on this opportunity. You are the average of the 5 people you spend the most time with, sounds like you have a good group.

4. Rinse and repeat this process. 

Good Luck!

Thank you Carl. For the b. portion of your reply :

b. Take the $48K from the refinance, invest in the multi-family you want to house hack.

Since I have to pay back my $25k loan (took out a loan for rehabbing). 48-25-20 (payment for the house) = $3,000 left to spare. The reason I am a bit confused is that once everything is done I feel like I will be in the same spot I started in...


But thank you again for the advice. It is appreciated.

Rotate Log in or sign up to reply
user profile avatar
  • Posts 14
  • Votes 16

Danni Green
New to Real Estate from East Chicago IN / Fort Wayne, IN

replied 22 days ago
Originally posted by @Peter M. :

@Danni Green Congrats on your first deal! It sounds like you've got a great support network and if they are all telling you its a good deal, most likely it is. There's no doubt you will encounter problems and your fear will bubble to the surface but you just have to persevere through it. RE is a good investment and most likely in 5 years you will look back and laugh at how worried you were now that the property is worth 25-50% more.

Ahhhh I hope so. I'm hoping this goes good. 

 

Rotate Log in or sign up to reply
user profile avatar
  • Posts 29
  • Votes 49

Jamie Derasmo
Real Estate Agent from Rhode Island

replied 22 days ago

Hi Danni! Have you used the calculators in this site to help you determine your cash flow and Cash on Cash return? I’m not going to redo the numbers you and Carl came up with, I’ll use those. So after you refinance, you’ll have $23K. Yes you’re only getting your original $20K investment plus $3K, but that $3K is a 15% return in a short time which is much better than other investments. Monetarily, you won’t be much further ahead in your bank account but you will have your initial investment back. Plus each month you’ll be making income. Eventually you’ll have enough again for a second investment or you trade out of this SF up to a property you hoped for. Sounds like a safe and good first investment!

Rotate Log in or sign up to reply
user profile avatar
  • Posts 14
  • Votes 16

Danni Green
New to Real Estate from East Chicago IN / Fort Wayne, IN

replied 22 days ago
Originally posted by @Jamie Derasmo :

Hi Danni! Have you used the calculators in this site to help you determine your cash flow and Cash on Cash return? I’m not going to redo the numbers you and Carl came up with, I’ll use those. So after you refinance, you’ll have $23K. Yes you’re only getting your original $20K investment plus $3K, but that $3K is a 15% return in a short time which is much better than other investments. Monetarily, you won’t be much further ahead in your bank account but you will have your initial investment back. Plus each month you’ll be making income. Eventually you’ll have enough again for a second investment or you trade out of this SF up to a property you hoped for. Sounds like a safe and good first investment!

Hey Jamie! 

I did use a deal calculator on this deal after I signed (mistake on my part) and the estimated cash flow was between 100-200 dollars every month. I don't know why I was expecting a 400 dollar cashflow on this but it is what it is LOL. 

But the documents are signed - sent earnest $$ and now just waiting on the seller to close. I am now in process of trying to get a loan (25k for repairs) and OMG its so much harder than I thought. I have good credit and steady income but I've been told no by 2 banks already and I am getting nervous (due to me just being young in my career Im guessing). Anyways you didn't ask for this information but I just thought I put it out there in this atmosphere just in case anyone had some advice with that. 

 

Rotate Log in or sign up to reply
user profile avatar
Check Rosette Top Subjects:
Team and Taxes & Accounting
  • Posts 14K
  • Votes 4.8K

Dmitriy Fomichenko
Solo 401k Expert from Anaheim Hills, CA

replied 22 days ago

@Danni Green good luck with your REI journey!

Rotate Log in or sign up to reply
user profile avatar
  • Posts 29
  • Votes 49

Jamie Derasmo
Real Estate Agent from Rhode Island

replied 22 days ago

@Danni Green tough position to be in with banks. Your best bet might be trying to ask family for money. Let them know they’d get it back within a certain timeframe and with some interest. You could try a private money lender but they’d still probably require a down payment and the interest would be much higher, definitely would eat into your bottom line. 

Rotate Log in or sign up to reply
user profile avatar
  • Posts 14
  • Votes 16

Danni Green
New to Real Estate from East Chicago IN / Fort Wayne, IN

replied 22 days ago
Originally posted by @Jamie Derasmo :

@Danni Green tough position to be in with banks. Your best bet might be trying to ask family for money. Let them know they’d get it back within a certain timeframe and with some interest. You could try a private money lender but they’d still probably require a down payment and the interest would be much higher, definitely would eat into your bottom line. 

 I'm scared I might have to wait to improve this property.... Yeah I don't have any family who can do that for me unfortunately.

Rotate Log in or sign up to reply
user profile avatar
  • Posts 6
  • Votes 6

Lyn Dee
Flipper/Rehabber from Wilmington, DE

replied 21 days ago

@Danni Green hey Danni! Fellow newbie member here although I've been doing REI for some time. I was really interested seeing you're in a similar field- I'm a software engineer. Good luck with your endeavors!

Rotate Log in or sign up to reply
user profile avatar
  • Posts 14
  • Votes 16

Danni Green
New to Real Estate from East Chicago IN / Fort Wayne, IN

replied 22 days ago
Originally posted by @Lyn Dee :

@Danni Green hey Danni! Fellow newbie member here although I've been doing REI for some time. I was really interested seeing you're in a similar field- I'm a software engineer. Good luck with your endeavors!

 Hey Lyn!! How is it over there in Delaware? I sent a request to connect with you. Feel free to message me and maybe we can chat. I'm always down to make new friends lol.

Rotate Log in or sign up to reply
user profile avatar
  • Posts 107
  • Votes 56

Jonathan Stone
Contractor from Tualatin, OR

replied 22 days ago

Congrats on the deal Danni.

I think you have a lot of opportunity based on the rough numbers you provided.  If you are looking for financing it is available.  There are a LOT of people looking to put their money to work.  I don't want to give any bad ideas but a short term high interest loan on your rehab may not be that bad of an idea.  If your family has worked in and around RE for some time see if they have any connections to people who invest.  You could partner with someone, find a willing money lender or possibly just wholesale the deal to someone else.  I am sure you will find a solution!

Rotate Log in or sign up to reply
user profile avatar
  • Posts 32
  • Votes 14

Colin Williams
Rental Property Investor from Nantucket, MA

replied 21 days ago

@Danni Green you could look into hard money lenders. I think with your family having a good reputation in RE and you being able to die that it's a good deal, you could qualify. I am working with Lima One and they have a few good options. Get the work done and then refi into a conventional loan to get out of the higher interest.

Rotate Log in or sign up to reply
user profile avatar
Check Rosette Top Subjects:
Traditional Financing and Real Estate Finance
  • Posts 375
  • Votes 215

Blaine Alger
Investor from Waco TX / Conroe, TX

replied 20 days ago

Relax, you got this. Don't try to talk yourself out of a deal. 

Lets look at what you got going for yourself:

-sounds like you have a decent paying job

-your family has been in the RE business for a while so I'm sure they would love to offer you some advice and bail you out if Sh*t hits the fan

-its only a total investment of 45k which is a lot of money but still relatively affordable

At the end of the day if nothing goes your way, it'll be a great learning experience. Even if you lose 45k, that would be worth it in my opinion.  

Let us know how it goes.

-BA

Rotate Log in or sign up to reply
user profile avatar
  • Posts 14
  • Votes 16

Danni Green
New to Real Estate from East Chicago IN / Fort Wayne, IN

replied 19 days ago
Originally posted by @Blaine Alger :

Relax, you got this. Don't try to talk yourself out of a deal. 

Lets look at what you got going for yourself:

-sounds like you have a decent paying job

-your family has been in the RE business for a while so I'm sure they would love to offer you some advice and bail you out if Sh*t hits the fan

-its only a total investment of 45k which is a lot of money but still relatively affordable

At the end of the day if nothing goes your way, it'll be a great learning experience. Even if you lose 45k, that would be worth it in my opinion.  

Let us know how it goes.

-BA

I appreciate the advice Blaine. 


An update for everyone : I got approved for the rehab loan!!! So we are in business haha! I'm so happy! 

Rotate Log in or sign up to reply
user profile avatar
  • Posts 1.9K
  • Votes 1.5K

Evan Polaski
from Cincinnati, OH

replied 19 days ago

@Danni Green , it is completely normal to be nervous.  I bought my first rental for $22.5k, cash and was terrified when the realtor called me and told me the bank accepted my offer.  The first thing I thought was "uhh oh, what did I miss in my walk through?"  But you have to trust your instincts that made you go after it.

As noted, you will hit hiccups. Thankfully, you have some margin between all in and ARV. And even if you go over on rehab, you have options to hold and rent or sell, even if you don't make a big profit.

Regarding your goals, a SFR is a great way to test waters on being a landlord. Maybe you hate it, and saved yourself the headache of buying a bigger property and living next to your tenants. Or, if you can get the rehab done and sell for a profit, you are that much closer to your goal, and with 5-10k more than you had initially.

Rotate Log in or sign up to reply
user profile avatar
  • Posts 107
  • Votes 56

Jonathan Stone
Contractor from Tualatin, OR

replied 18 days ago

@Danni Green  
Congrats on the Rehab Loan.  We all knew you would make it happen.  

I don't have a ton of experience with Rehabs but I would suggest as an engineer your mind may work a little like mine.  I suggest documenting your processes, taking note and pictures.  If you decide this is what you are going to keep doing you can refine your processes over time.  Plus you can share with us here on BP.

Rotate Log in or sign up to reply
user profile avatar
  • Posts 14
  • Votes 16

Danni Green
New to Real Estate from East Chicago IN / Fort Wayne, IN

replied 18 days ago

Thanks! I do plan on documenting my progress and have already took pictures/videos of my before. Feel free to connect with me as I will be posting my progress on my profile and eventually in the forums!

Rotate Log in or sign up to reply
user profile avatar
Check Rosette Top Subjects:
Real Estate Finance, Team, and Residential
  • Posts 454
  • Votes 584

Chris Levarek
Rental Property Investor from Phoenix, AZ

replied 6 days ago

@Danni Green Congrats! Already by taking action, you are ahead of many people on this platform. The first one is always a learning experience. My recommendation at this point, keep a close eye on the property and work on building that support team if not already in place. Weekly communications with a property manager and the construction crews. Ask questions of your lenders and agent. Ask questions to BP. Try not to assume much or set it and forget it.

I am an IT engineer who started in 2018 in much the same way. I partnered with a private lender for the renovations capital. So don't forget this is an option! Happy Investing!

Rotate Log in or sign up to reply
user profile avatar
  • Posts 14
  • Votes 16

Danni Green
New to Real Estate from East Chicago IN / Fort Wayne, IN

replied 5 days ago
Originally posted by @Chris Levarek :

@Danni Green Congrats! Already by taking action, you are ahead of many people on this platform. The first one is always a learning experience. My recommendation at this point, keep a close eye on the property and work on building that support team if not already in place. Weekly communications with a property manager and the construction crews. Ask questions of your lenders and agent. Ask questions to BP. Try not to assume much or set it and forget it.

I am an IT engineer who started in 2018 in much the same way. I partnered with a private lender for the renovations capital. So don't forget this is an option! Happy Investing!

I really appreciate it Chris!! 

 

Rotate Log in or sign up to reply
  • 1
Resources Read, see, and learn more!
Link Real Estate Investment Calculators
Link BiggerPockets Blog
Link Path to Purchase
Link Mortgage Loans
Link Find a Contractor
Link Real Estate Agents
Link Hard Money Lenders
Link Real Estate Listings

Top Contributors

Salvatore Lentini
Salvatore Lentini
Doylestown, PA
9.43
Score
Ciji Masser
Ciji Masser
Frederick MD
3.53
Score
Tre Irvin
Tre Irvin
Las Vegas, NV
2.56
Score
Jessica Piff
Jessica Piff
Churchville, MD
2.55
Score
Joe Villeneuve
Joe Villeneuve
Plymouth, MI
2.48
Score

Starting Out Trending Discussions

  • How do yall feel about buying a rental property all cash?
    49 Replies
  • Hard Money Down Payments
    9 Replies
  • PM red flags to watch for?
    9 Replies
  • stumbled on a potential deal what's next?
    4 Replies
  • External only inspection required?
    17 Replies
Log in Sign up

Log in

Forgot password?

If you signed up for BiggerPockets via Facebook, you can log in with just one click!

Log in with Facebook

Or
btn_google_dark_normal_ios Created with Sketch. Continue with Google

Let's get started

We just need a few details to get you set up and ready to go!

Use your real name

Use at least 8 characters. Using a phrase of random words (like: paper Dog team blue) is secure and easy to remember.

By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.

Or
btn_google_dark_normal_ios Created with Sketch. Continue with Google

Why create an account?

Receive a free digital download of The Ultimate Beginner's Guide to Real Estate Investing.

Connect with 1,000,000+ real estate investors!

Find local real estate meetups and events in your area.

Start analyzing real estate properties, we do the math for you.

It's free!

Explore

  • Membership
  • Community
  • Education
  • Marketplace
  • Tools
  • FilePlace
  • REI Resources
  • Perks
  • Glossary
  • Reviews
  • iOS App
  • Android App

Company

  • About Us
  • Press
  • Advertising
  • Careers
  • Stats
  • Contact Us

Important

  • Editorial Guidelines
  • Terms of Use
  • Rules
  • Privacy
  • FAQ

Social

  • Facebook
  • Twitter
  • YouTube
  • Instagram
© 2004-2021 BiggerPockets, LLC. All Rights Reserved.