This may be a little premature on the "success" side, but thanks to the support from BP, the BP community, friends, and family, I am now racing down the path of buy-and-hold rental property and becoming a landlord. Backing up 18 months, I was laid off from a good job with 17 yrs there. It was a real shock to the system as I was performing well and making the company money, but higher-ups needed to find some cash so they let go 3 well compensated employees. Being out of work, nearly 50 years old, and looking at my 401k, which I was diligent in my contributions from a young age, I realized that in my retirement I had social security as my only "passive" income and the rest was coming from my savings, which was then market dependent for growth once I stopped contributing.
Although it took me longer than I wanted, I was able to get another W2 job, but while I was looking I started a handyman business. As a younger man, I did high end remodeling and custom home building. I figured I didn't want to do that again, but maybe a handyman business could provide some extra cash, and keep me busy while I looked for another job. Well one Facebook post on the neighborhood page and I had all the work I could handle. And continues to grow just through word of mouth. However, about 1/2 of my customers from the neighborhood had me doing repairs on their rental properties. I had a couple of conversations about getting into that myself but I didn't really take it any further.
Then selling a couple of items on Craigslist, I met Joe. Retired military and a great motivational speaker. Not sure how we got on the topic, but he was telling me about his buy-and-hold strategy with rentals. Now, that I have been involved with BP, i realize he was just telling everyone about what he did in order to expand his network. Typical CL transactions are 10-15 min, get the cash and never see them again. Joe and I talked probably for 30+ minutes about rental investing and he turned me on to BP. Thanks Joe! That was in June of this year.
Step 1 was to join BP and start reading posts.
Step 2- listen to podcasts new and old
Step 3 - develop my own spreadsheet to evaluate deals
Step 4 - start reading books on rental investing and becoming a landlord
Step 5 - update spreadsheets - profits were not as attractive as before but are realistic. Good deals became bad deals, great deals became good deals.
Step 6 - learn local market. The Austin area will not have a 100K multifamily turning $2k/month in rent (thanks Brandon for rubbing that in :0)
Step 7: Pool cash and determine a plan. Long term to have 20 doors in 10 years. Short term buy 2 duplexs in 2017 - Start looking
We are now in the last week of July,
Looked at 3 properties and offer made on first property 1st week of Aug - rejected;
Second offer made - 18k below asking - counter was 15k below original asking. Past inspection and on our way to closing. Originally would not have been my first choice, but there is a lot of upside potential for this property.
Great on our way....
This week an opportunity for a better than good deal comes up for a pair of duplexes next to each other. Put in offer for both, got them.
Now I am excited and terrified all at the same time. 0-3 properties in 3 weeks and should have everything closed by early Oct. Need to close on the first one in 2 weeks.
So much for analysis paralysis - Now back to re-read the beginners guide to landlording.
Now to shift to income generation and additional savings for next year provided I survive being a landlord
Thats awesome @Bryan Petrinec Just curious are these cash purchases? I always curious as to how people close on multiple properties in a short time frame if they are not all cash.
Thank you @Tiffany S. No, these are all under conventional loans with 25% down. I was lucky enough to get connected with a mortgage company that works with investors and the lender is able to take rents into account. All three units are fully occupied, so there is positive cash flow on day 1. The downside is a slightly higher interest rate, but as long as I take that into consideration when running my numbers it is covered. They will work with me up to the max of 10 loans. The nice thing is the first one is the hardest to get.
One decision I had to make was deciding to buy one property cash or several with conventional loans. From a cash flow perspective, this was the right choice. Even when you own the property outright, there are still costs, like property taxes which are significant in Texas, to account for. As for equity and appreciation, it is a push.
I have been fortunate enough to get connected with a bunch of like minded individuals locally and through BP who have been a tremendous help. I am sure there will be bumps in the road, but hopefully I will be prepared.
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