My Real Estate Journey

25 Replies

I've posted a couple times so far on the forums and absolutely LOVE the wealth of information on here. I wanted to keep a journal of my process to financial freedom through real estate and share it with both beginners and seasoned investors who I'm sure have gone through a lot of what lies ahead. 

To give a quick background, I graduated college in Dec 2013. Two months later, I had my first post-college job as a Recruiter. While living at home, I threw all my money at student loans and within 2 years, I was debt free. I started thinking about how I could live the life I wanted and came across many blogs such as MrMoneyMustache preaching financial freedom. Thinking more about their ideas, it struck me that I didn't want to live on 20% of my income and there must be a better way which lead me to real estate and Biggerpockets. I joined a couple years ago but didn't get serious until about 3 months ago. I started saving up money for a down payment and reading real estate books ( Millionaire Real Estate Investor - Keller, Build a Rental Property Empire- Ferguson, The Book on Rental Property Investing - Turner, and currently reading The Richest Man in Babylon- Clason)

The past couple months I have looked at some properties, 2 SFH and 2 MFH. I had an idea of what I was looking for but was new and just wanted to get my feet wet. Neither of these properties were good deals so I passed. It's important to remember that passing on bad deals is as important (if not more) than finding good deals.

Being a newbie, I have learned a lot already from @Brie Schmidt who helped me change my strategy in my market (Chicago). I was originally focused on 2 unit buildings but those don't cash flow so I have moved onto looking for 3-4 unit properties.  I plan on learning a lot more from Brie (as long as she's willing!) and many other investors who have accomplished what I want to. I have connected with a couple other investors and plan on picking their brains as well to learn and absorb as much as possible. 

I want to track my progress from Day 1 and give updates on properties I've seen, numbers I've crunched, and deals that I've closed (and ones that got away). I will give my thoughts on each deal and financing that I've gone through. My hope is that people can use this as a way to see the process first hand (struggles and triumphs included) and also for me to see my growth as a person and investor. 

I couldn't be more excited about the journey and look forward to sharing with you all! 

Hi @Brendan McElhaney thanks for sharing! I'm in the same boat as you are. I'm a recent grad who has saved up enough money to begin investing. Now I'm searching for the right property to invest in. I put in my first offer on a HUD property a couple of weeks ago but I was outbid. Now my search continues. I look forward to seeing where your journey takes you. Good luck!

Hi @Gabrielle E. @Bhekizwe M.

Thank you! I'm looking at a couple properties on Saturday and two of them seem to have good numbers but I'll have to see what condition they are in. They need some updating but I think they could easily rent in their current state. I am looking at 3 flats in Northern Chicago so I'm hoping one of these properties will work out but I'll keep you updated. Best of luck and let me know how the investing goes!

Thanks for sharing, and may fortune smile on you, which, given your initiative and commitment will likely happen sooner, rather than later!  

@Linda Cheng

Thanks for reaching out! I hope so! I looked at three properties today and I plan on making an offer on one so excited about that. I am hoping it works out! I'll post an update soon.  

Hi @Brendan McElhaney

Thanks for sharing! I enjoy hearing the stories of investors at different stages. All the best as you secure the next deal!

We can file this one under a learning experience and a lesson learned the hard way. I made an offer on a property that I really liked. I went well below asking price and they came back with $9000 off their original asking price. After speaking with my dad, I figured I'd go see the property with a partner of his who focuses on flipping homes to get an idea of repairs needed. I was hesitant to do this because I wanted to make another counter offer and get the deal wrapped up. 

I ended up seeing the property yesterday and made another counter offer. By the time, I woke up this morning they had accepted another person's offer and that was that. I tried to get a couple thousand off the asking price and my hesitation ended up costing me the deal. According to my analysis, it would have been a good deal at the asking.

I know there will be other deals out there but it's pretty discouraging to say the least. I'm upset with myself and it really just sucks. Anyways, you live and you learn. 

UPDATE as of 11/3

So I met with another investor on this site for coffee and he was a wealth of information. I had slowed down at looking at properties to give me some time to save some more money and planned on looking again in early 2017. After speaking with this investor, I thought why not just see what's out there. 

I came across a great property at a super affordable price. It was only back on the market because financing fell through. I contacted my realtor and set up a showing for two days later. The next day the selling realtor said they needed a "highest and best" by 4 PM that day. I was at a crossroads because there was no way I could see it before making an offer. I really liked it from the pictures that I saw of only one unit (completely updated, although the description says all 3 units were updated) and the fact that the tenant's were already paying rent. This told me that the other units were also in good conditions and rentable. It also helped that the tenant's were on a month to month lease and planned on continuning living there. I can get through the winter months with tenants and decide from there if I want to increase rents/have them sign a longer lease. 

So I wouldn't recommend this to everyone, but I made a leap of faith and put an offer in, and they accepted! I went above their asking price because even at my offered price, it was such a great deal. I have a walk through contingency in place as well as an appraisal so if anything is askew I have some recourse. I am exhilarated and nervous all in one! I feel really good about this one and I'll keep everyone updated as to how the inspection goes. 

Thanks @Rosston Smith

So bad news but we ended up pulling the offer as things weren't as described for the property. I was weary when I had to make an offer sight unseen but in the end I've learned a lot about the process and I am excited about finding the right property. 

Update as of 10/8/2017

I didn't realize it's been almost a year since I last posted. It's been an especially tough year in the market in Chicago. There just hasn't been that many multi family properties that make sense. If/when one does come up, it usually goes within a week and goes substantially over in price. Most of the properties have gone over list price -  to give you an idea, I put in a bid of $25,000 over list price and was outbid with an all cash offer. 

I also had an offer accepted on a home which was very exciting! I was getting everything in order going through all the inspections and the inspector mentioned that I should get a structural engineer to look at the property, not looking good at this point. As I was in the crawl space with the engineer, he says "this is good" so I'm thinking Great!, he goes on "well, not for you, but I've never seen anything like this so it's a good story for me" and went on to describe how the foundation is in really ****** condition and parts of the foundation had shims to support it. Anyways, at this point I knew I couldn't move forward with the property. It was unfortunate but obviously I'm glad I found out before I moved forward with the purchase. 

So where am I now? I'm still looking for my first property. I was really hoping to have purchased two properties in 2017 but I have to keep in mind that real estate is a long term goal, and it's always better to wait for a good deal than hop into a bad deal. With that being said, I'm starting to lower my requirements for cash flow in Chicago. I want to purchase 2-3 multi family buildings in Chicago (9-10 units) and start building equity as quickly as possible. Once I do that, I'd like to use that equity (plus additional savings) to purchase multifamily in lower cost MW cities. 

Also, I'll try to update this a bit more. 

Update as of 1/1/2018. 

Finally a positive update, I found (well, my agent) an off-market and we ended up getting it under contract 10K under asking! I couldn't be more excited and nervous to finally start my investing career. I will be house hacking this first property and updating the units one at a time. They are in rentable condition currently but I do want to update the units as to get the highest rents possible and best possible tenants. I'll keep everyone updated on that progress. 

The property is zoned as a two-unit but has 4 livable areas. There are three 2br and one 1br in the basement (with a ceiling height of 6'10"). The height and zoning will cause some insurance issues. I plan on AirBnbing the basement unit while I renovate the other units. I still need to figure out what I'm going to do with the basement. I can try and rezone the property and dig it deeper but that's expensive and there's no guarantee I can get it rezoned. We'll see. I'm hoping to get $1300, $1300, $1200 once everything is fully updated. 

Great story! congrats on the deal!

Update as of 6/18/18

5 months or so into owning my property and I couldn't be happier! I took over the building with only 1 tenant in place and was able to quickly find a great tenant! I was tempted to take a couple less than stellar tenants because I wanted to fill the place quickly but ultimately waiting an extra 3 weeks really saved me a ton of headaches. I started to print a 1 page info sheet listing rent, parking, info about the unit, etc. It really helped me be consistent as I realized I was answering tenant's questions differently (how much is the garage?, etc). 

I'm also in the process of updating the basement so I could get that rented out as well.  This process has taken me WAY longer than I expected - although I think it's just naivete on my part thinking I could rehab a basement in 1.5 months myself. The renovations include installing an egress window, installing allure flooring, new kitchen, paint job, trim, etc. I'm hoping I can finish this to get it rented by August 1st. We'll see how this progresses. I'll add pictures soon. 

In terms of issues, just today I had to call a plumber for the first time. Other than that, I've had small leaks here and there but nothing too bothersome. I'm really excited to get the renovations done and will start looking for property #2 soon... although the Chicago market is pretty tight right now. 

Originally posted by @Brendan McElhaney :

Update as of 6/18/18

5 months or so into owning my property and I couldn't be happier! I took over the building with only 1 tenant in place and was able to quickly find a great tenant! I was tempted to take a couple less than stellar tenants because I wanted to fill the place quickly but ultimately waiting an extra 3 weeks really saved me a ton of headaches. I started to print a 1 page info sheet listing rent, parking, info about the unit, etc. It really helped me be consistent as I realized I was answering tenant's questions differently (how much is the garage?, etc). 

I'm also in the process of updating the basement so I could get that rented out as well.  This process has taken me WAY longer than I expected - although I think it's just naivete on my part thinking I could rehab a basement in 1.5 months myself. The renovations include installing an egress window, installing allure flooring, new kitchen, paint job, trim, etc. I'm hoping I can finish this to get it rented by August 1st. We'll see how this progresses. I'll add pictures soon. 

In terms of issues, just today I had to call a plumber for the first time. Other than that, I've had small leaks here and there but nothing too bothersome. I'm really excited to get the renovations done and will start looking for property #2 soon... although the Chicago market is pretty tight right now. 

 Hey Brandon.  Fellow Chicago investor here.  Congrats on your success.  Sounds outstanding.  Where is the property located?  

congrats on everything!  I will be looking for my first 4-flat in Chicago shortly, love to continue seeing your updates and hope to post one of my own soon!

"I'm hoping I can finish this to get it rented by August 1st. We'll see how this progresses. I'll add pictures soon. " LOL

I finally got the unit rented our starting October 1st! I wrote another blog post about it below! @Christi Hawkins , @Jeff Burdick @Leo Kwok  

https://www.biggerpockets.com/forums/843/topics/634666-first-apartment-rehab-finished

Quick update - I'm about two weeks away from finishing the last of the rehab on my first unit. 

I am under contract on a second four-unit in the Chicagoland area. This was a great deal and I thought it'd be a good idea to offer a bit over asking price to wrap things up but it ended up signaling to the seller that they could get more for the property, which I obliged. I ended up paying above asking price but it's still one of the best deals I've seen in Chicago. I officially close on January 23rd! 

I close on my second property in about a week after pushing back the closing date.

I've been showing the renovated attic unit and hoping to get that rented out for February 1st. I'm planning on moving out of my current property and into the newly purchased one within the next month. I'm hoping to have my current unit rented out for March 1st which will give me a fully occupied home. 

As for my future intentions, I really want to continue to grow my portfolio and I'm looking to add 20+ units over the next year. My mind has been bouncing around to different ideas but I'd love to find a local bank where I can invest in properties in Chicago with about 5-10% down. I'm also looking to partner with a multifamily investor and learn the ropes so I can begin purchasing 20+ unit value adds. 

Really looking forward to the next year!

I ended up closing on my second property January 30th, which helped me accomplish my goal of closing on two properties within a year (I closed on the previous home on January 31st 2018). All of the units are rented out, which provides a nice cushion to start with for cash flow. I'll have to move in within 60 days or so. I plan on replacing the plumbing to copper so that'll end up costing about $15K or so (getting quotes currently). 

Other than that, I'm up to 8 units now and want to continue growing moving forward. With the 5% down program, I can only purchase a property every year or so but I'd like to grow much faster than that. I've read Dave Lindahl's multifamily millions to get a better understanding of larger deals but, at this point, I just need to continue building out my network. 

Why do you want to replace the plumbing to cooper?  @Brendan McElhaney

I am putting PEX in my apartments now.  Lots of the cooper was recycled by the tweekers and other addicts who resided in the place prior to my purchase.  Using PEX in the long run is much better as the tweekers and other addicts leave it in place as there is no after market for it.

Hi @Lynnette E. , the plumbing lines are very old and starting to corrode. The water pressure is quite low in some areas and it's long overdue. 

Chicago requires copper. I'm not too worried about tweekers stealing all the copper. People are currently living in the property so that's not a huge concern of mine. 

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