Hi, I am interested in finding out how your first deal went? What did you learn? What was your biggest mistake or what really worked? How did you market, find your deal?
Thanks and have a happy and prosperous New Year!
@Gina Gee first closed deal of this year was today. Purchase 12k will put about 30k in rehab and hold for 3-5 yr. Expect with market upswing and rehab will be worth 100k. For me I based on cash flow, but the appreciation (even forced appreciation) is were the big pay days come from. Even better when you cash flow in the mean time.
I was looking to buy a new family home. Someone "Promised s friend" I would go look at his house. (I had already contracted for our new home.) But I went. I knew my values, because I had just bought. When the Seller told me what he wanted, I called my wife. She said, "What on earth would we do with another house?" I said we would rent it. So, I bought it on the spot. I was so stupid. I didn't know you were supposed to have GURU's, Mentors, Seminars. I just (stupidly) went on and bought 26 more over next 6 years. I guess, if I had spent dollars on Experts, I would have done better? My equity, after 6 years was about $.........
Stay out of real estate, unless you are willing to spend thousands on EXPERTS.
My first deal was with a business partner back in May of 2013, and the deal was off the MLS. We did not run any numbers before we bought the property. It was a split decision that we thought of after I brought up a couple ideas I heard on a BP podcast. It was a crazy Hail Mary; however, we have run the numbers since than and it was a great deal! The cash flow is the best thus far, and we have a great tenant in there! Now we are much more analytical about what we are going to purchase.
You need to make sure you perform the correct analysis on whatever aspect of real estate you go into no matter what. It comes down to the time you have and how passionate you are about the subject. It's the why that will get you to the what!
Welcome to BP!
I bought my first house in Vegas in 12' while living in Wisconsin... flew in on a thursday the day after it listed put an offer on Friday and by Sunday they had 17 offers and had to go 12k over listing but it was still a hell of a deal for a 4 bedroom 3 bath with a pool and outdoor kitchen....
Have a property manager who rented it out after 2 weeks been cashflowing positive $1,000/month ever since + its appreciated $100k in value
Saving all the profits for my next one some time this year... most likely in Florida somewhere
My first deal was a complete disaster! I found a distressed SF on a large lot zoned for up to 5 units. I tried to utilize the 203k program to convert it to a 4-plex. I was going to live in one unit and sit back and collect the cash from my renters, it was a brilliant plan with a few minor issues:
- I chose a mortgage broker who represented himself well, but had no experience with a 203k loan. It was the blind leading the blind.
- For a project of that scope, there were many costs that I knew nothing about, and that my mortgage broker either didn't know about or didn't tell me about. The mandated 203k consultant, who you have to pay 1% of the total project cost up front (in my case $4k). Surveys, engineers, architect to put together plans to submit to the bank in order for them to underwrite the loan (about 10k).
- Time, we had a 60 day contract, but it became apparent that we needed more like 120 days to get this thing done. In order to secure contract extensions and keep the sellers from backing out I released all the escrow money (4.5K).
- When the bank went to evaluate the loan, which my broker had assured me was already a done deal, it turned out that my income, even with the projected rents from the other 3 units was insufficient to qualify. I had assumed that the rents would be used to offset the monthly payment, but they were lumped in my overall income, and the mortage payment exceeded the 29% Mortgage Debt to Income ratio that the banks love.
I know the post title is first successful deal, and I actually (3 years later) consider this deal a huge success. I learned a TON by losing twenty thousand dollars, and I'm still actively investing in RE and loving it.
I'm currently working on rental rehab that will give a COC return of 30%+ and negotiating on a flip in a great area with fantastic numbers. Never. Give. Up.
@Bryan Henry that sounds like an awesome deal, well done sir!
@Jeremy Tillotson also sounds like a fantastic deal, how did you find it?
@Joseph Ball what would we ever do without the gurus telling us that we can't do it without them and their secret sauce?
Welcome @Gina Gee !!!
Here is my first deal, please see the link :) Hope it works, but its all spelled out there. Good Luck!
Let me try this again...here is the link ;)
My first deal was a wholesale, and I screwed up the contracts. On the buying contract I said Buyer pays all closing, but on the seller contract I said it is shared, so I ended up paying for half of closing costs and title insurance out of my assignment fee.
... and I never made that mistake again :)
Thanks for sharing!!
My first deal was a Triplex I bought for 21k shortly after I got my RE License. I had to go through a bidding website called hubzu.com. It was completely vacant and in need of some TLC but pretty minor things overall. I ended up only putting about 3k into each unit doing all the work myself. Had trouble in the beginning finding tenants thinking that a sign out front on its busy road would surely grab renters attention. Not really the case, I was borderline in panic mode thinking that maybe it was a bad purchase until I put it in the newspaper and craigslist. After that I got it filled up pretty quick collecting a nice $650-700/month profit. They are lower income units renting for only $375/month. But so far I feel that its been a solid purchase. Used its equity to help purchase a 6-unit fully rented apt 4 months later!
My first deal was a HUD home SFH 3br/2b (1792 sq ft) that I bought as an owner occupant.
Closing, 3.5% Down Payment and Repairs: $10,000 (roughly)
Currently still living in the residence and rent out one of the extra rooms to pay half my mortgage.
Refinanced last month and it appraised for $160,000.
Took out $40k of equity to keep my LTV at 75% and only $100 increase on my mortgage.
Have my first rental under contract to close on the 11th and looking at bascially turn key with a cash on cash in the 16% range and upwards of 23% if i manage myself.
I learned all my information from local meetings and biggerpockets, be smart and understand the numbers.
Just like in school when you were learning math, you cant just read how to do it and understand it. Go home and analyze deals, even if you have no intentions on buying them or cant becuase finances or whatever, DO HOMEWORK. Run mock analyze and get good with the numbers.
Best of luck!
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