You Never Forget Your First...
BP Community,
For the past four (4) months I've been reading about all your success stories and chomping at the bit to officially become a real estate investor and landlord of my own property. As they say, you never forget your first :) I'm happy to announce we have closed on our first property and I wanted to post the details of the deal to 1) spread the success back into the community that helped us to achieve our goal and 2) get some feedback
After many weeks of analyzing property in our local market (Bay Area), we quickly became discouraged with the bloated cost of properties out here in CA. I think many of you would agree how ridiculous it is to see a price tag of $850k for a 750 sq/ft home built in the 1950's with the original amenities! No thank you. It was this reason alone that we started to research out of state markets and chat with turnkey providers. During this time, I wrote out a real estate investment (REI) plan to have some frame of reference for what our (wife, partner, and I) investment strategy would be. I have to say I was skeptical about doing this at first, until I put the pen to paper. The magic that happens when you actually sit down to do work and overcome resistance is truly remarkable. The act of writing out our plans helped us to begin formulating more creative strategies for acquiring properties. More on this later.
We found a turnkey provider that had a Duplex on the market in Kansas City, MO, which seemed to fit our deal criteria. As new investors, we ran the numbers 100 times, and finally felt comfortable with them. Long story short, we found a national lender locally in the Bay Area, worked through the lending process, and after ~40 days, closed on the property.
Numbers:
-75% LTV @ 4.25% interest rate
-Sale price: $138k
-Appraised value: $144K (woot woot equity!)
-Gross Income: $1,700 / month
-NOI: ~$1,150
-Mortgage: $509
-Cash Flow (with maintenance, CapEx, and vacancy): ~$620 / month
-Cap Rate 9.6%
-CoC: 19.5%
Admittedly, turn key was even more simple than we expected. As new investors we probably over-analyzed and thought too much into it at times. It really does take actually going through a deal to learn that it's not as intimidating as it may seem on the surface.
We're extremely excited to finally be a part of this community, and can't express our appreciation enough for all the folks that helped us pursue our first property. We're chomping at the bit to find the next one!