Hey BP Members,
I am officially a buy and hold investor!!!! Well, as of November 30th.
Three years ago, my wife wanted to start a business together. The idea was to find a business where we didn't know a lot, but we each had strong attributes in which to contribute to the whole. After searching, she found real estate investing. She is a former plant manager and LEAN process manfacturer. I have a background in Journalism, marketing and I work for a printing and design company.
Like a lot of newbies, we started in wholesaling. Not only that, but we started in virtual wholesaling. We've worked in Ohio, Houston, Dallas-Fort Worth, Kansas City, Phoenix and St. Louis. -- We live in Scottsdale, Ariz.
We knew wholesaling wasn't the path to financial freedom, but it was a start to get us into the business and learn. So we trudged through the past couple of years. She's at home with our two sons full time and I work full time, so this was very much a side gig for us.
About two years in, I decided we needed to start looking for a rental property. Arizona was out of the question, as the Cap rates weren't what we wanted. However, I knew the numbers could work in my hometown of Springfield, Illinois. Not a sprawling metropolitian by ANY stretch, but the numbers worked and I grew up there.
So I connected with a Realtor, got set up with MLS alerts and waited for a deal. And waited. And waited.
All the while, I was sharing my real estate journey with a family member, as I knew they had money sitting in the bank doing nothing. So when they came out to visit, I asked. "If I come across a deal, would you like to buy property with me?" And they said Yes!
I wanted to buy a multi-family deal and finally came across a duplex in an up and coming neighborhood.
Duplex built in 1900
Totally gutted and remodeled seven years ago
2/1 on top of each other
We purchased rent ready with very little repairs needed
Purchase Price - $71,000
Down Payment and Closing Costs - $18,000
Repairs - $1,500 ($1,000 credit to us at closing)
Rent - $1,200 - $600 per unit
PITI - $472
Repairs - 6% - $72
Vacancy - 5% - $60
CapEx - 8% - $96
Property Management - 9% - $108
TOTAL - $808
$392 Cash Flow, $196 per unit
$4,704 a year
26% COC Return
Here's the best part .... ZERO dollars out of my pocket. My PML put down all the money and is taking 50%, so his COC is 13%, better than the 3% he was getting and mine is infinity.
Did I strike gold? Nope, far from it. But I did break a lot of barriers.
WHAT I LEARNED
- Stop being scared. Thousands of other people do this EVERY SINGLE DAY. If they can, so can you.
- When you think you can't, you can. Just push a little harder.
- Trust your referral network. It all started with a Realtor and he referred me the mortgage banker, insurance guy and property management.
- Stop watching TV at night and start analyzing deals. Dancing with the Stars will always be there, that deal might not!
@Matt McConkey Congratulations on your first buy & hold investment property! It was great to hear about your patience in finding the right deal and having your "team" together when the deal appeared. I "jumped in" early last year on a good deal and went through a remodel...but she's cash-flowing now! It's a good feeling! Best of luck hitting your 2018 goals! Maybe we can meet up for some coffee sometime?
Congratulations! keep it up!!!
well done @Matt McConkey !
Congrats Matt, that's awesome! Well done!
Congrats and awesome house, love the molding. Great job on being thorough.
@Matt McConkey good for you getting into the game. What’s your plan for 2018?
@Matt McConkey does owner pay water/sewer? What about lawn care or snow removal? Or are the units individually metered? If they aren’t you’ll want to revise your numbers
Congrats! It gets a lot easier from here! 2018 may be your year.
@Shiloh Lundahl Great question! My plan for 2018:
1) Continue to grow my wholesale business by closing 12 deals (all on a part time basis, as I work full time)
2) Close on four fourplexes in St. Louis. I already have one under contract, set to close in Jan., so I'm well on my way for that.
So I'd like to grow my portfolio from two doors to 18 by Dec. 31st 2018.
@Caleb Heimsoth Yes, I didn't mention water/sewer. These are split between units. Lawn care and snow removal are also done by the bottom tenants.
I provide the mower, shovel, they do the rest. I give them $25 off their rent and they get a sense of pride in how the property looks. As you can see, they take good care of the yard.
And everything is split metering. That's my VERY FIRST question when I'm talking to an owner about a multi-family unit. Split utilities or not.
@Bobby Beard Thank you, Bobby! I am really looking forward to 2018.
Happy new year! Thanks for your inspirational post. When you think you can’t you can just push a little harder!
@Matt McConkey - Congratulations! I also just bought my first out of state rental too in Michigan just before Christmas. I like the way you broke down the deal, showed pics of the property, and my favorite was the lessons learned section. I definitely can relate to the "Stop being scared" line item - going through the process was terrifying for me until it was over and now looking back it wasnt so bad. Great job, hope you can continue acquiring OOS properties in 2018!
@Matt McConkey congratulations.... You rock... I am real estate here in Michigan and i have helped multiple investors from out of state to buy rentals in area. IF anyone need help, feel free to contact me
@Matt McConkey wow awesome and congrats Matt! On the same journey! Who is your agent there? Would you mind sharing some contacts? I’m out of Boston.
@Mora Clark I find it so funny people are finding my little home town and investing there.
The agent I used is no longer an agent, however, I do know a great one. She's helped me put in a couple offers on properties recently.
I will message you her info.
@Matt McConkey congratulations on this OOS deal! I'm in a similar position right now and would love to know:
- Did you mainly rely on agents and the MLS to get your first deal
How long did it take for you to land this particular deal
I'm quite anxious because I feel like I'm not getting enough deals onto my plate. Thanks for your help!
@Kendric Ng My hometown is small (under 125k people) and there is literally ONE wholesaler who is actively doing deals in the area, so my options were limited on what I had available to buy being across the country.
I believe I was looking at MLS deals for a year, but got really serious over the last 3-6 months. So when this hit the MLS, I put in an offer the day after it was listed.
That being said, my PML was Ok with leaving the money in on the deal. Had it been my money, I would have passed, as I didn't have the capital to leave in the deal.
My suggestion: Be patient, but have ALL YOUR DUCKS IN A ROW.
1. Have a Realtor sending you MLS deals
2. Find wholesalers who are actually sending out deals and connect
3. Ensure you have property management interviewed and ready to go
4. Make sure you have the capital liquid
5. Make sure you are pre-approved with your lender (if you're getting a mortgage)
6. Make sure you have a handyman x 2 ready and on the team as well
I cannot stress enough to be patient. Everyone is anxious for their first deal. Don't let analysis paralysis set in, but know your numbers and be ready to pull the trigger when the time comes.
Thanks for this, Matt. Making sure that I have all my ducks in a row is probably the most important thing here for me, and while I should be patient for the right deal, it doesn't mean I shouldn't be organizing everything else (e.g. wholesalers, PMs, etc.)!
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