Just completed deal #1, Triplex

24 Replies

It was a hard fought battle over a few months. I just closed on a Triplex that generates great income and the rents are currently below market average. Already working on #2...

Congratulations, Ka'Ron! Was it a triplex here on the peninsula? Would love to hear some details. 

Way to go @Ka'Ron Purnell !  Just don't overextend yourself since this is your first. A  crawl walk run strategy will lead to the most success for you long term.

Congratulations. I wish u much more continued success. share the details when u can.

Exellent Job.

Very inspiring to see investors in this area doing great things. Keep up the good work.

Sorry about the delay everyone. Here are the numbers so far.

List Price $179,000

Purchased Price $158,500

Bank required Drive by Assessed Value $173,500

Commercial Loan to my corporation after 20% down.

Loan $129,000, 25 yr amortization, 5.5%, 10 yr balloon, no prepayment penalty.

Property was tenant occupied with three tenants. Owner paid water and sanitation at app. $140 per month.

Rents were:

Unit A - 1 bed, 1 bath $600 per month. On month to month lease.

Unit B - 2 bed, 1 bath $800 per month. On month to month lease.

Unit C - 1 bed, 1 bath $575 per month. On one year lease since Feb 2012 on autorenew option

I'm requiring tenants to all sign new 12 month lease, non-automatic renawal, to bring rents closer to market averages for local area and cover water and sanitation payments.

Unit A - $750

Unit B - $925

Unit C - $750

Congrats @Ka'Ron!  Already creating value off the bat.  Great job!

Did the current tenants stay with the increase in their rent or are they moving out? 

Unofficially, the tenants want to stay even after the rent increase. I'm waiting for them to return the letters expressing their intent along with copies of the new lease. 

The exterior and interior of the property is outdated. So I'm not concerned if they want to vacate. If they do, I will just start my interior renovations early. I will be able to attract better tenants for increased rents. Also, looking at listing the property with the city to house homeless veterans. This would allow me to receive gauranteed rent payments for 12 month periods through the use of section 8 vouchers. Also, a great opportunity to provide housing for vets in need. 

Great work Ka'Ron :0 always good to hear other people getting their 1st investment locked up :)

Can you elaborate on how you got the lead on the triplex ? was it MLS, realtor erferall ? and was teh battle with the seller or other bidders

again congrats

It was an MLS deal that was listed for a few months. What attracted me was the seller was offering owner financing. I made an offer and then after consulting with his attorney he backed out of the seller financing deal. I saw the value in the deal and didn't want to miss the opportunity so I ended up getting a commercial loan to my corporation. It ended up being a much better deal for me in the long run. I went through Navy Federal Business Services.

Hey Ka'Ron

Congrats.  I love it that you are already thinking about the second one.  Your positive energy and the willingness to fight those few months is the difference between "I should" and "I must".

I love the fact that you bough the property right.  Carry that strategy into all your deals, and don't feel bad if you have to walk away.  You'll find others

Gino

Congratulations @Ka'Ron Purnell! You seem like a very smart, well prepared investor! I'm currently looking for my first deal opportunity in the South FL market. Hopefully, I can jump into this as soon as I find something I'm comfortable with. Question: did you have any criteria for your first property, other than "something that makes money"?

@ Rony Mueller, after about  year of absorbing as much of Biggerpockets as possible my criteria were owner financed, multifamily, tenants in place, and income producing of course.

I was actively seeking owner financed deals after reading Brandon's book on How to Invest with no or little money down. I felt like owner financing would be the easiest way for me to land my first deal.

Multifamily because I believed at least one unit would be always be occupied. You will always have turnover but with multifamily as long as you can keep enough units full to cover the mortgage payment you can stay above water. Multifamily also gives you the option to just move in, if you ever need to. I figured if things were to get bad, if absolutely necessary I could move into one of the units and rent out my house to help pay the mortgage.

Having lenders in place and actual proof that you can provide to a lender weighs in heavily when your application goes to underwriting. My lender was actually excited when they say that the property had 3 units and they were all occupied. It's a win-win for both myself and the bank.

Income producing is a no brainer. From scouring posts on BP some investors shoot for at least $100-$200 cash flow per month per property. Being new, I aimed for at least $500 per month to give myself more room to make mistakes. Brandon and other investors always bring up the importance of getting your calculations and investment criteria right and if the deal doesn't meet your criteria, just walk away with no emotional attachment at all. During the closing, I almost walked away from the deal twice. Once when the seller informed my realtor that the rent for one unit was improperly listed on Zillow at $75 dollars higher than what it actually was. The second time, the seller informed me that not all of the utilities were paid for by the tenants which was originally told to me from my realtor when he showed the place. Needless to say, my realtor got an earful from me for not having all of the facts straight. Turns out, it wasn't his fault because he was misled by the seller. My realtor represented both the seller and myself during the transaction. Overall, I made sure my numbers fit with all of the properties I looked at. With every change brought up during closing, I revisited my numbers before deciding to proceed with the closing. If your numbers don't fit with the deal, just walk away with no emotional attachment at all. There will always be another deal out there in my opinion. Sometimes, an even better deal than the first one.

Thank you for your awesome response! Good luck in your future deals! I'm sure you'll do great. I am new to BP and I find these forums very inspiring. Since now I'm in a position in which I can dive into RE, I'm meeting with my realtor next week to see about a property. Hopefully I'll be able to make a thread about my first deal very soon too!

Very inspiring! Thanks for sharing and best of luck in all of your future endeavors. 

@Ka'Ron Purnell Congratulations on your first deal and wishing you much success as you continue on your journey! I finally jumped in as well last year and got my first unit remodeled and rented out and is already looking for my next deal. 

Good Luck!

@Cedric Mitchell, congratulations man. I wish you continued success in the future as well. 

Congrats!  I bet it feels great, and I like reading these, but a first deal story is even better :)

Also good to see the NFCU reference since I'm a member as well as already using it as my primary bank so I'll have to keep them in mind!

Awesome. Congrats on your success. As a Navy Vet, its great to see you using NFCU. I am new to REI and recently moved back to GA where I was once stationed. I hope to get a multifamily soon, one that I can live in. Unforn one thing I found out by reading through the VA loan guidelines is that in order to use existing rents to help qualify, I need to have 12 months of landlording history. This of course has set me back some in my plans. I am trying to figure out a way of making something happen. I look forward to your next deal post.

Reading through this, I'm new to this site.  Looks like you got bank financing for your corporation on your first deal?  Is this correct, and is this typical?  Anything you care to share would be much appreciated.

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