First deal done! First rent check in the bank!

120 Replies

Finally got my first deal done!!! It was a hell of an experience, but I wanted to receive my first rent check before I posted my success story.

Quick background on myself: I am 25, finance degree, work full-time, aspiring to be financially free, father owns a house building company in Houston, TX (moved out of Michigan after the housing crash)

I picked up this SFR property in Westland, MI. It's west of Detroit in the Metro-Detroit area. I bought the place for $76,500. 3 bedroom, 1 bathroom, about 1,000 square feet, 1.5 car garage. It was the least taken care of property on the street.

Updated the kitchen and bathroom. All new paint, installed vinyl plank flooring, updated electrical, new fixtures, misc small things.

I went the conventional mortgage route and put 20% down on the property. I spent about $20,000 in repairs and now have it rented out for $1,175 per month.

When I say it was a hell of an experience that is because I ran into a lot of issues along the way. Finding and house and purchasing was not the issue, but the rehab portion of it did not go as expected... It's a very long story, but I had issues with my first contractor and painter. I knew not to pay them a large portion up front so I luckily did not lose any money because of them.

Things I learned:

  • Process of purchasing a house
  • Process of rehabbing a house
  • Rehab costs
  • The tough process of firing people
  • Additional items to look at when doing a walk through (dead tree that needed to be removed, gutter work)

Advice I can give:

  • Don't be cheap. Sometimes saving as much money as you can, is not actually a good thing. My discount contractor and painter turned out to be a nightmare. 
  • It's OK to make mistakes! I am chalking up my overspending and mistakes to part of the learning process.
  • Use your resources. My father used to build houses in Michigan. He gave me phone numbers of some guys to speak to, but I thought they were too expensive for what I was trying to do. Hindsight is always 20/20 lol..
  • Talk to the neighbors!!! I learned that there was fire started by a mishap with a grow operation someone was running out of the garage lol. This lead me to understanding why the garage looked basically brand new.
  • Dive in! I learned more in a couple of months after "diving in" than I did in the time I had spent researching and reading about how to invest in real estate.

This was a major learning experience for me, but after receiving that first rent check it was all worth it. Knowing that I will be mostly hands off (using a property management company) is an awesome feeling!! I am now reevaluating my investment strategy and am in search of another property to buy!

Before and after pics:

Shoutout to my real estate agent @Keith Jourdan for walking me through the house-buying process and answering any questions that I had and currently have. There is definitely a benefit to knowing an agent that also invests!

Also, please feel free to connect with me! I am always looking to expand my network and meet people with the same interests!

Thats awesome Denis. I can only imagine how great it feels to receive that first rent check. So you spent about $97,000 so far. What do you think the market value is today, if you don't mind sharing? What do you plan on doing next? Maybe a refi and rolling into the next deal?

Great job on that, and congrats! 

As a 20-something-year-old aspiring real estate investor also from the Detroit area (although I still live around here), it's good to see a success story involving my local area.  Congratulations, and good luck to you!

What street? I have 15 or 16 in Westland.

Looks great! Congrats on the first deal. There's nothing like the feeling of getting that first rent deposit in the bank! 

And it's certainly true that the real learning begins when you actually just go out and buy a house :)

Congratulations on pushing through it and securing your first tenant! I'll have to keep your story in mind when I start scouting out for my first contractor, and avoid going for the low cost - low quality of work companies! haha

Congratulations @Denis R. !!!  Property looks great and I'm excited to hear about the rent coming in.  

I just connected with your awesome realtor the other day while seeing his success post. I grew up in Saginaw, but now live down in Dallas Fort Worth. I'm not new to REI, but I am new to rehabbing.

I'm asking this because I'm getting ready to hire contractors soon as well (I'm about to make my second offer for a distressed property this week, first one didn't pan out, hopefully this next offer is chosen):  How many contractors did you have submit bids?  Were the builders/contractors handling the entire project, or just a portion of it and you were the overall project manager?  If you could go back, would you handle the 'interview/walkthrough' any differently, or ask them different questions?  How did you agree on when/how much they'd be paid?  

- Sorry I know that is a lot, but I have never hired a contractor to help me with a rehab and I'm a little nervous.  

Congratulations again!  It makes me happy to see all of you smart and talented investors making metro Detroit beautiful.  Go Lions/Pistons/Tigers/Red Wings! :)

Dave

Congratulations on your flip @Dennis R. I'm from Dallas, TX (currently the hottest market) trying to do my first flip as well, hopefully before turning 28. Need to save about 10k more for the down on hardmoney. Thanks for the inspiration man!

@Denis R. - way to go dude! Glad to see you took the plunge!

Outstanding job, buddy. Great work.

The place looks great. Well done! You’re on your way!

Congrats! It is a good thing that you learned about your not so great contractors on your first house. It is a lesson everyone learns at some point and can get expensive if you don't find out quickly. The house looks great and it looks like you spend the money in the right areas. I hope your tenant works out just as well!

Great success story! So how did you find your property management company? Also what all does the property management handle for you? Specifically if there is a repair, do they have in house repair workers?

@Sherif K. I would say that the house is worth about what I have into it. That was another one of my mistakes. If I would have more precisely estimated my rehab costs, I would have bought at a price that added some additional equity.

At this point I am just going to hold on to this house as it is and see if there is any appreciation over the next couple of years. I have additional money to put into another deal I am looking to purchase another house. Maybe another conventional purchase or find someone to help me fund a BRRRR. I am not quite sure yet to be honest.

@Donald S. I used one contractor for majority of the work. I did have a handyman do some of the miscellaneous things and another guy install all of the vinyl plank flooring.

I saved a lot of money by purchasing the materials on my own. I used referrals and advice from other investors on where to go for some items. It took a lot of time to do this my first time around, but it will definitely be worth it for future purchases. I was very pleased with the second contractor I found!

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