2 deals closed in 30 days - SFH, LTR
This community has been invaluable to me getting started on my investment journey! As of today, I have my first 2 investment property deals closed and rented! I want to say thank you to all of you that helped me or provided insight along the way. Between the forums and the FB groups, I don't think I could have made so much progress so quickly without all of the BP resources. I’m truly grateful for the relationships I’ve been able to build by being a member of BP. I met my realtor here who has been a Rockstar and helped me to find many other integral team members for my out of state investing.
I closed on my first 2 investment properties in a span of 30 days allowing me to reach my goal of being a real estate investor by February 2021. I wanted to share my experience with you all so that those that are still in the research stage, can be encouraged to get out there and take action.
Background:
I live in South Carolina but decided to invest out of state when I saw that the market here was skyrocketing and it is hard to meet the 1% rule here. I chose Fayetteville, NC because of the large military base there as well as the pricing being more favorable. It is also within driving distance, so not as daunting as investing many states away.
The Deals:
Fortunately, I found an amazing realtor on BP that works with investors in the Fayetteville market. Once we connected and figured out my goals, we hit the ground running and I was making offers within a week of getting started. It took about 5 offers (made in 7 days!) to get my first deal, but eventually it worked. It is a 4/2 SFH that after some negotiations, I got for $112,000. After talking to my lender to confirm that I still qualified for another one, we started looking again. The only thing that slowed me down was the holidays. However, on New Year's Eve, my agent and I put together an offer that he submitted for me on NY Day and it was accepted! House #2 is a 3/2 that I got for $120,120. I went from a homeowner w/ 1 primary residence to being under contract on 2 investment properties in a matter of weeks! I closed the first house in January and the second one in early February. Thanks to my agent introducing me to a great PM, they were also rented within a few weeks as well! By the end of February, both houses had tenants and I am now a landlord with 2 LTRs.
The Financing:
I was fortunate enough to buy my primary residence as a short sale 9 years ago and therefore, I had about $100,000 in equity. I decided to do a cash out refi to take advantage of the low rates and get a down payment to kickstart my investing. I used the same lender for the refi and both of my purchases. I was able to get traditional financing with 20% down and 3% interest on both loans! I definitely got in during the window of great rates and before things started tightening up. Both properties were move in ready with very little needed in the way of repairs. The second one was still on septic, but city was ready for hookup, so I went ahead and made the up-front investment to get that connected as I didn’t want it to cause a headache down the road. I paid cash for this and was able to get it complete for $2600 (including the connection fee to the city).
The Result:
As I mentioned, both properties have paying tenants in place now and are cash flowing $300/month each. They both rent for $1195. This is after direct costs and 5% vacancy, 5% repairs, & 8% capex. The first property ended up needing a new HVAC after a couple of weeks of having tenants in place. This was expected as it was the original unit (21 yrs old), but I was hoping to get 6-12 months out of it. I paid half up-front, and the other half came out of my first months’ rental income. Today, both are paying on time and the repairs are paid for.
Lessons Learned:
I learned a lot along the way! And I would encourage anyone that is still waiting because they think they need to learn more, to get started. The best way to learn is by doing. Sure, mistakes can cost you money, but so can a good education! Both houses were owned by out of state landlords, but I had completely different experiences with each. After having my inspections done, I requested repairs to be made.
House#1: Even though the sellers of house #1 agreed to complete some of them, they were not done on closing day. Things I learned from this: 1. It’s always better to negotiate price and do the repairs yourself so that you know they are done to your standards. 2. Don’t wait until 20 minutes before closing to do a final walk-through of the house. 3. Not everyone is good for their word. ☹ We ended up closing on time, with the promise that they would get the repairs done ASAP & they would send me $200 in gift cards for my trouble. In the end, my house sat vacant a week more than it should have because I was waiting on them to complete repairs AND they did damage to the house while completing the repairs which I then had to pay someone to fix. And, the gift cards never came.
House #2: I got a call from my insurance agent last week stating that the insurance inspector went by both properties and they want repairs to be made to the shed on this property. It’s an old metal structure with no doors and apparently, some rust on the side. The insurance company wanted the rust painted and doors put on. After doing some research on cost and communicating with my tenant if he “needed the structure”, I decided the best plan of action is to remove the shed. I haven’t really figured out how to avoid a surprise like this in the future, so I welcome your suggestions.
My Goals for 2021:
Now that I have 2 cash flowing LTR’s under my belt, I’ve set my sights on STR for my next investment goal. I’m currently doing research on my local area (Charleston, SC) and eventually also want to invest in the Gatlinburg area. I have my reserves in place for the current properties and am rebuilding my funds for my next investment. A partnership may be in my future if I can find the right fit for a partner for a STR investment.
Again, thank you to the BP community and anyone I have connected with during this journey. Six months ago, this was only a dream and it still felt so far away, and now here I am making my dreams come true.