Whew - First Deal is DONE!

[Laura H.]

After joining BP last November, @Brandon Turner hosted a webinar the night before Thanksgiving where he challenged everyone to buy a new rental property within 90 days. At the time I thought, "That's all fine and dandy, but I work full time and have a young family to raise. There's no way I'll have time to do that." Exactly 70 days later I closed on a duplex in an A+ neighborhood (Lee's Summit - a suburb of Kansas City).

I waited to post this story until the rehab was done and at least one side was rented. It took a bit longer than expected, but it's finally there. Now someone else is paying the mortgage for this asset, and I get to just sit back and watch the money roll in :o)

Here are the numbers:

*Note: The Repairs, CapEx, and Vacancy are low (5%). This is because the property already has a newer roof and stucco siding. I also replaced all of the major appliances, a 30-year-old water heater, most of the flooring, and painted the whole interior (including ceilings) during rehab. This is in a very desirable neighborhood, and was only on the market for a few days before we had an approved renter.

Could I have done better? Meh, maybe. Still, I'm pleased with how it turned out.

Some things I did right:

1. Looked at the numbers, not the property, to see if the deal makes sense. Even though I was dead-set against duplexes, BP's Rental Property Calculator showed me that this was a good deal even with the rehab needed. I undervalued the rent ($725/side) and was very pleased when my property manager said we could get $875/side!
2. Joined my local REI group ($99/yr) and got 20% off paint at Home Depot. That alone saved me hundreds. I also shopped sales, scratch-n-dent, and package deals for appliances.
3. Found ways to cut corners financially - bought materials from the Habitat for Humanity store, resurfaced damaged/ugly countertops instead of replacing them (Miracle Method), called in favors from handy friends to save on installation/repair, etc.

Some things I would have done differently:

1. Use a short-term lender (hard/private money). We refinanced another property to come up with the money for this one, and now I realize we could have done a BRRRR instead. Still considering doing a cash-out refinance after the loan has seasoned a bit...
2. Expect everything will take twice as long as I think it should. I was hoping to have both sides rent-ready by March 1st (one month after closing). Everyone was backed up - from handymen to carpet to painters. It took until March 30th to have just one side rent-ready.
3. Work on your business, not in your business. My original plan was to do most of the rehab work and manage the property myself. The further we got into the rehab, the more I realized my time was better spent coordinating these things rather than doing them.

I have to say that in-person networking was key for this. The BP community is an excellent resource, but rubbing elbows with more experienced REI folks was really invaluable.

So no more excuses - Get out there, meet people, and make some deals!