My First Deal (With Numbers)
I wanted to share the story of my first multi-family deal. It's not the best deal ever, but it satisfied the criteria I have set for a good deal, so I went for it.
Back story: I've been listening to the BiggerPockets Podcast for a couple of months and learning a ton about investing in real estate. Before this, my wife and I became landlords accidentally a couple of years ago when we rented out our house to friends (after buying a new one for ourselves, naturally). I call it "Landlord - Light". They signed a 2 year lease, and in two years I believe I had under $2k in expenses related to the property. In any case, at the end of their lease, our tenants/friends bought the house from us and we had some cash to play with. We decided to re-invest in real estate.
We bought a double in a trendy neighborhood in Indianapolis on the east side (Irvington). Here are the details:
List Price: $169,900
Purchase Price: $162,000
Down Payment: $32,400
Debt Repayment: $600/month (I was able to secure a 3.75% interest rate over 30 years)
Escrow: $217/month
Gross Rent/Month: $2,000
I have been evaluating deals based on the 50% rule. I like to keep things simple, and conservative. Based on the 50% rule, I'm cash flowing $200/door. In the next year, we are planning some small improvements that will generate $2,200 in rent, raising us up to $250/door in cash flow.
I'm already looking for the next deal. Many thanks to BiggerPockets!