Just acquired my first income property! A 4plex!!!
Hello all BP family I am excited to announce that I just closed on my first property which happened to be a 4plex. I am excited for this new chapter in my life and would like to give a brief synopsis of how it all went down to hopefully inspire others to make a move towards making their dreams a reality.
So first off I began my interest in REI last summer. I was focused on learning about investing in stocks but I had read Rich Dad Poor Dad so that sparked my interest to see what this whole REI was about. I began by talking to people who then referred me to bigger pockets :) and purchased a few real estate books some of which some I still have not finished. For about a year I kind of stagnated because I was focused on paying off my vehicle but I continued to read books, listen to podcast on BP and chat with other colleagues who were interested in REI.
Fast forward to this summer my car was paid off my stocks were doing pretty decent but I still had made no real advancement in pursuing my goals of purchasing a property. So I decided I was done making excuses and ready to make moves. Now I understand that many people struggle at this part because they are scared to fail or they feel the time isn't right and honestly I felt that within that time frame of a year but I have failed many times in my life and I wholeheartedly believe the best way to learn is by experiencing it hands on.
Now even to this day I am surprised how fast everything moved once I took that first step which was getting set up with a realtor who also did REI. Once I found a realtor who was as motivated as I was and also had the experience to back up there talk everything moved so fast. In my market at the time there was not many multifamily homes and what was available was subpar. On a Monday a 4plex came on the market for a great price and I analyzed using the Rental Calculator on BP and based on the info I had and saw that it cashflowed exceptionally well(Details at the end of post). I told my realtor I wanted to see it and by that Thursday we went to go check it out. There were also three other interested parties there. Later that day he called me and said it had an offer on it and asked if I wanted to make one and with little hesitation I said yes. So the next morning I went in and made an offer and I honestly had no expectation of getting it so I chose to remain emotionally unattached. About an hour later I got a call at work saying they accepted my offer!! Complete shock!
It took about 45 days to close because we had asked for them to do quite a few repairs but it was all worth in the end and now I can proudly say I am a Real Estate Investor.
Heres a quick rundown of the property details
Asking Price:$189000
I offered $192000 because it already had an offer.
Based on Cap Rate for my area of 8% it should be worth around $260000
I asked for them to do some big and some little fixes such as replacing the furnace and creating postive drainage on the foundation to name the big ones and agreed on a price increase to $194000.
It appraised for $209000!!
FHA Inspection called for egress window which was a surprise so to make it quick we upped the purchase price to $196000 to cover the $2000 price for egress window.
Total rent is $2700 and my mortgage is $1226 so once all operating expenses were added in I am cashflowing about $950 which for my area is awesome since most multifamiles are at 6-8% Cap Rate and my property was 11%.
I financed using FHA loan putting only 3.5% down because my plan is to move into a unit for a couple of months do renovations to get the rent up and then buy another multifamily and repeat.
So there you have it and I am very excited to continue building my portfolio but I know and will reiterate the point that you can spend all your time learning and dreaming but once you make that first step it suddenly turns into you running and making your dreams come true.