Rental Property Investor · Dothan, AL · Member since 2019 · 35 posts · 32 votes
I recently won a bid on my first rental property.
Asking was 37000
Won bid on 34000
Appraised for 55k
Single family 4 bed 1.5 bath 1200 sq
In subdivision of rental area.
Located in Webb,al. 15 mins from Dothan, Al.
House is walking distance to dollar general and major steel factory. Good subdivision
Newer roof, no major repairs needed
Section 8 will pay 800 a month min.
I decided to put in business name llc. It delayed process. Closing is in a couple weeks.
HELP LOL.
I have been watching bigger pockets for 2 months and decided to jump in. And other investor podcasts and all. Rich dad poopr dad saved my future from rat race. Any and all advice needed
Rental Property Investor · Greenwich, CT · Member since 2015 · 4k+ posts · 2k+ votes
6y
At first blush, @Kam Mill, you're beating the 2% rule, which is great, but not the whole story.
You said no major repairs. There's sure to be some deferred maintenance. How much is required?
Have you inspected the property and all of it's systems?
What are ALL of the expenses?
What are your financing details?
You wrote that "Section 8 will pay $800/month." Has this been inspected and approved by Sec. 8 yet? Will the land lord be responsible for utilities (they are in many Sec. 8)?
Rental Property Investor · Dothan, AL · Member since 2019 · 35 posts · 32 votes
6y
@Jermaine Chad Ingram its a HUD foreclosure and im not to sure about rehab because not much is needed. Update the flooring from carpet to wood and some painting. It has newer metal roof. Nothing major. Any suggestions cor updating to increase rental income. It was built in 1983 and still have some features. The cabinets are in good condition. Need to paint ceiling and remove popcorn off ceiling. Bathroom has been updated.
Rental Property Investor · Greenwich, CT · Member since 2015 · 4k+ posts · 2k+ votes
6y
At first blush, @Kam Mill, you're beating the 2% rule, which is great, but not the whole story.
You said no major repairs. There's sure to be some deferred maintenance. How much is required?
Have you inspected the property and all of it's systems?
What are ALL of the expenses?
What are your financing details?
You wrote that "Section 8 will pay $800/month." Has this been inspected and approved by Sec. 8 yet? Will the land lord be responsible for utilities (they are in many Sec. 8)?
Rental Property Investor · Dothan, AL · Member since 2019 · 35 posts · 32 votes
6y
@Marci Stein im very nervous, lol. However, with this BP community im sure i can get through this, to achieve financial freedom as this is my first step.
Rental Property Investor · Dothan, AL · Member since 2019 · 35 posts · 32 votes
6y
@Jaysen Medhurst
Expenses:
Carpet cleaning. 125
Electrical update. 200
Inside painting 300
Small tree removal 300
Popcorn ceiling removal and paint 150
Hotwater heater. 150
Window screens 100
I had the house inspected. Nothing major needed.
So about 1000 out of pockets expenses
I found a small bank to finance. I was going to house hack with 500 down, however, i rather use a rental.
The bank wants 7k down and finance the remainder from 34k. Because im putting it in LLC
6 percent interest on 15 year with 5 year balloon. However it should be paid off in two years. I currently work and have no personal expenses other than student loan and cell phone bill.
Real Estate Agent · Fort Pierce, FL · Member since 2019 · 257 posts · 105 votes
6y
@Kam Mill
So say you get the $800 a month from section 8. you would take $400 of that money and put it away for future events. capital expenditures for repairs and for future black swans which are events that are unpredictable and generally highly consuming of resources.
Then you take the other $400 and from that you pay your mortgage and interest. then whatever is left over is your cash flow
House is walking distance to dollar general and major steel factory. Good subdivision
Newer roof, no major repairs needed
Section 8 will pay 800 a month min.
I decided to put in business name llc. It delayed process. Closing is in a couple weeks.
HELP LOL.
I have been watching bigger pockets for 2 months and decided to jump in. And other investor podcasts and all. Rich dad poopr dad saved my future from rat race. Any and all advice needed
I read the entire thread and you can move forward with confidence. The one question that wasn't answered is if you will be paying utilities or not. If so instead or holding $400 per month I would hold 30% for future repairs. Plus you work and have no expenses so your it sounds like your income can front the other 20% if you want to go that high.
Surveyor · Dothan, AL · Member since 2014 · 425 posts · 391 votes
6y
Congratulations on the purchase. Your rehab numbers seem very low. From the pictures, the house looks pretty good, but I think you'll have 4-5 grand to freshen this place up. I have one in this neighborhood, but I'm going to sell if I get a certain amount. Do your rehab numbers account for labor cost? Be sure to include everything so you'll have a real cost of doing business. Good luck.
Contractor · Baltimore county, MD · Member since 2018 · 17 posts · 15 votes
6y
Kam.Yeah, looking at the rehab prices they seem very low. I'm guessing you're gonna put in some labor and maybe those are material costs? But, $150 for water heater? I don't think you can buy one for that, much less removing and installation. Stuff almost always takes longer and costs more than you think it will. I'm still learning that after 20 years in remodeling homes. Good luck though.
Multifamily Syndicator · Houston, TX · Member since 2016 · 1k+ posts · 2k+ votes
6y
@Kam Mill Congratulations on buying your first investment property.
Now, the only thing you have to put into consideration here is that certain Section 8 tenants may require really hands-on property management and in some cases a lot of CapEx (Capital Expenditure).
One way for you to mitigate substantial loss is to set aside some money aside every month so that in an event you need to repair something you are able to do that swiftly.
Also, you have to keep the unit up to a certain standard.
The rest you will learn along the way, as they say, Experience is the best teacher.