To buy or not to buy? (First deal cold feet)

12 Replies

Hi everyone! Long time member, semi-first time poster. Here’s my situation: I was bitten by the real estate bug in my senior year of college (2-ish years ago) after reading Rich Dad Poor Dad. After a long time of reading, researching, and relocating (NYC -> Delaware), I’m one week out from closing on my first deal. The deal is a short sale, in a seemingly nice neighborhood, exactly one mile from The University of Delaware. My plan is to do a live in flip (Purchase price $172K, Reno $14K), and then rent out rooms to friends, roommates, etc. the property is basically move in ready, but the renovation (which would be almost all DIY) is an attempt to have the property appraise near top of market at $240K. All in all everything seems good, and going according to plan. The numbers work, nothing’s holding me back, but I keep feeling increasingly nervous. I’m still fairly young (25), and nobody else my age that I know is even talking about purchasing property yet. Does anyone have any feedback on when they purchased their first deal? Does everyone get these jitters around this time, or is it just me?

You’re never to young for your first purchase assuming it’s a good deal. Just be as sure as you can be with your numbers. Rent, rehab, utilities, taxes, insurance, mortgage payment, repairs, vacancies add it all up. Make sure your after repair value is conservative.

Everyone is nervous when the buy. You never know 100% if it’s a good buy but you can come close with good due diligence. When I found out my offer was accepted on my first purchase I had to sit down a moment to catch my breath.

Yuriy, you should have some hesitation at this stage and you should feel emboldened at the same time. You have the knowledge, the plan, and the tools (financial modeling and calcs). So you can let the butterflies win or you can swallow and get the deal done. Keep us posted!

Most rewards come with risk, right? Its normal to be nervous when you acknowledge inherent  risk. For me, I'm more scared of waking up one day as an old man knowing I never tried to "make it". 

FWIW, even if this deal doesn't work out like you want, you probably won't lose big and you're young enough to rebound even if you do. But chances are, you'll far outpace your peers that are just showing up at their jobs each day hoping to get promoted. 

Originally posted by @Yuriy Kaunzinger :
Hi everyone!

Long time member, semi-first time poster. Here’s my situation: I was bitten by the real estate bug in my senior year of college (2-ish years ago) after reading Rich Dad Poor Dad. After a long time of reading, researching, and relocating (NYC -> Delaware), I’m one week out from closing on my first deal.

The deal is a short sale, in a seemingly nice neighborhood, exactly one mile from The University of Delaware. My plan is to do a live in flip (Purchase price $172K, Reno $14K), and then rent out rooms to friends, roommates, etc. the property is basically move in ready, but the renovation (which would be almost all DIY) is an attempt to have the property appraise near top of market at $240K.

All in all everything seems good, and going according to plan. The numbers work, nothing’s holding me back, but I keep feeling increasingly nervous. I’m still fairly young (25), and nobody else my age that I know is even talking about purchasing property yet. Does anyone have any feedback on when they purchased their first deal? Does everyone get these jitters around this time, or is it just me?

 I purchased my first house at 23 in Wilmington, Delaware. It was a foreclosure and needed what I considered a ton of work at the time (~35k once it was all done). I redefined what move in ready was with this house as it had a roof, running water (including the water leaking from the dining room ceiling), and heat (the central air was broken for two years before I fixed it). I bribed my wife (at the time my girlfriend) and friends, with beer and pizza,  to come visit me at the house to clean and paint and do the light construction work. 

Point being...yes you can buy a house that young. Who cares what your friends and other people your age are doing? Is this the best deal ever? Probably not. Will you go bankrupt? Probably not. Will you learn a lot? Absolutely!

@Yuriy Kaunzinger

Congrats on the property, I hope everything goes smoothly this week and you can close as scheduled.  I would agree with what others said that it is pretty normal to feel nervous.  My wife and I completed a live-in fix and flip last year in Pike Creek.  It sounds like you are on your way to getting your first deal under your belt.  If you have any questions don't hesitate to reach out.

Thanks for the positive feedback everyone! I definitely have butterflies/hesitation/ etc. , but will definitely be going through with the deal. I’ll keep all of you posted on the outcome!

Hello, it’s perfectly normal to be nervous. People get nervous when there is risk involved with something they care about. The advice that I would give you is to not rent the rooms to family and friends. They are the worst tenants because eventually they may try to take advantage of your relationship by paying late or not at all and it can strain relationships that you value. Also investing young is a great advantage you have more time to recover from mistakes and mentors love to help young ambitious people. Good luck on your real estate journey.

You're already paying rent now, so even if you don't do the upgrades and move in some roommates, it will reduce your rent by a lot (maybe to zero). You win!  If you do the DIY stuff, it's scary but you can learn a lot on YouTube and with patience you will be able to pick it up.  How do I know? There are LOTS of contractors and handymen in every city, and if the skills were as had to learn as juggling then there wouldn't be so many of them.  Even if you don't make a ton of money on your first one, you will learn a lot and you will be in the game building equity and getting ready for your next one. 

Originally posted by @Yuriy Kaunzinger :
Hi everyone!

Long time member, semi-first time poster. Here’s my situation: I was bitten by the real estate bug in my senior year of college (2-ish years ago) after reading Rich Dad Poor Dad. After a long time of reading, researching, and relocating (NYC -> Delaware), I’m one week out from closing on my first deal.

The deal is a short sale, in a seemingly nice neighborhood, exactly one mile from The University of Delaware. My plan is to do a live in flip (Purchase price $172K, Reno $14K), and then rent out rooms to friends, roommates, etc. the property is basically move in ready, but the renovation (which would be almost all DIY) is an attempt to have the property appraise near top of market at $240K.

All in all everything seems good, and going according to plan. The numbers work, nothing’s holding me back, but I keep feeling increasingly nervous. I’m still fairly young (25), and nobody else my age that I know is even talking about purchasing property yet. Does anyone have any feedback on when they purchased their first deal? Does everyone get these jitters around this time, or is it just me?

I'm 25 as well and I'm closing on my first deal which is buying 8 single family homes lol. No one else in our age group is doing this. Go big and take massive action and get it done :) if you did your research and the numbers work out, go for it!

Hey Yuriy,

I did something very similar at 27 - bought a 2 bedroom townhouse and rented out one room to a friend from school. Then bought a 3 bedroom townhouse, moved with my friend as a tenant and got another tenant friend for the third bedroom, and kept the 2 bedroom townhouse as a rental. This was close to the top of the market, so I ended up underwater when the market crashed, but guess what - my tenants made my mortgage payments and I was living rent free, the fact that I had negative equity did not impact me at all. I kept buying rentals, and I never had any regrets.

Good luck with your purchase, and feel free to reach out if you have any questions - I am a fellow Newark DE investor.

Hi Everyone!

Just wanted to provide an update on this thread. Partially in part to all of your encouragement, I went ahead and closed on the deal this week! I have a fairly detailed scope of work that needs to get tackled, and then I'm going to look to house hack this bad boy. Thanks again for your positive words!

@Yuriy Kaunzinger Are you having cold feet due to the renovation work? I've had friends who've done this before without experience. Turned out for the worse since they were doing all the work themselves. If you're not sure if you can handle the work, either build up a good team of contractors or find something that needs less work like cosmetics. You may also want to bring in a partner. If you need help finding and hiring contractors, I wrote a whole book on the subject. Good luck!! 

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