Rental Property Investor · Bloomington, MN · Member since 2019 · 404 posts · 542 votes
6y
My first investment property purchase was a 3 bed, 1 bath condo for $49,000. It was a foreclosure. It has gone very well. I have owned it for 8 years now. If the right opportunity came I would consider selling it and doing a 1031 exchange. However, it cash flows very well (mainly due to the purchase price) which means that I'm fine holding it longer.
It is located in Newport, MN, which is south of St. Paul. I can't think of anything that I wish I knew at the time. I'm glad I made the decision to jump into real estate investing. I wish that I was more aggressive over the last 8 years both in terms of expansion and how I handled the properties I have owned. I have been too relaxed about increasing the rent amount.
Now I am at a point where I have to decide how to expand. I have 7 "doors" now.
Rental Property Investor · KY · Member since 2013 · 1k+ posts · 537 votes
6y
Turnkey 3/2 SFR in Memphis, TN in late 2017 for $84,000 that rented for $885/month. It now rents for $905/month. Had my first turnover (cost about $1,600) and new tenant moved in within weeks.
Now have 5 turnkeys. It’s the long game for me. Not a ton of cash flow now, but solidly rehabbed properties with no deferred maintenance that have good tenants who pay their rent.
Rental Property Investor · Saint Paul, MN · Member since 2016 · 45 posts · 37 votes
6y
My first experience is a bit different from ALL the others in this thread. My first was a 13 unit 7 bath rooming house that was 100 years old that I bought in St. Paul MN in 1986. I could write a book on all that I've learned from that purchase and continued ownership to this day. In the early 90's we converted it down to 7 units. To not stray too far from what may be helpful (as I have hundreds of life lessons from this one purchase) I'd offer the following:
1. Do the plumbing and electrical right the first time; in the early years I would just grab what was close, easy and cheap such as extending wire into a new room. These days I gut out all the old stuff and put in 20 amp circuits and get rid of any old plumbing I can. This avoids constantly solving leaks and drips and busted pipes and complaints of not enough power
2. Pay attention to the roof and exterior envelope of the building. Water, squirrels, bats, and even wasps can create horrible headaches and expense. Catch need for repair of the envelope early and get it done
3. Do not buy a property without televising the sewer to make sure there are no breaks, cracks et al.
4. Set the ground rules with your tenants early and reinforce the rules
5. Run it like a business; that includes offering value to your customer, treating them as customers, and if there are problems solve the problems ASAP
6. And in case this is not obvious, avoid buying a 100 year old rooming house with shared baths!
Rental Property Investor · Upstate, NY · Member since 2012 · 3k+ posts · 3k+ votes
6y
Tired of dorm living I bought a run down owner hold. The Old guy (seller) lived behind the property & every week I would drop by have a beer with him & pay the mortgage. He warned me to never tell my room-mates that I owned it otherwise they will take advantage of me, he gave me a lot of great advice. I ended up having the opportunity to work at one of his companies during one of our required co-op stints.
I got it for around $4800 ($500 down) rented every room (including the front screened in porch) & had all the guys help rehab it. Kept it for several years until I got into rehabbing salt damp damaged bungalows with a few other guys, so I reluctantly sold it for about double.
In 2012 my wife & I visited the city & most of the front yard had been expropriated to enlarge the road but the place was immaculate. While taking pics of the old home the owner approached us & told us they bought it in 2009 for $975k. Wish I still owned them all!!!
Rental Property Investor · Canton, OH · Member since 2017 · 1k+ posts · 1k+ votes
6y
@Charlie Anne
3/1 BRRRR in a good school district. Bought sight unseen, paid $26K, put $30K into it, and it appraised at $100K. I still own it. The one thing I wish I knew then was how powerful REI can be towards cashflow and net worth.
I first property was a 4 plex in Phoenix, AZ. Bought in 2009 with a 203K FHA loan. It was vacant and in pretty rough shape. I still have it. It is doing great. I wish I knew about refinancing and pulling money out for a down payment. I probably could have bought a few more identical buildings.
Specialist · MN · Member since 2014 · 42 posts · 13 votes
6y
About two years ago I bought a townhouse for 76k. I’m getting 1k/month for rent! First deal was a good one for me. Great cashflow. Unit connected to mine sold for 110k a year ago. I’ll hold on because of the cash flow. Cash on cash is good because I only put 1k for down payment, no closing closet since i bought from the owner.
Good luck on your first deal. Look forward to hearing how it goes.
Rental Property Investor · Sacramento, CA · Member since 2015 · 1k+ posts · 893 votes
6y
In 2012, my cheap SFR in Sacramento CA :) Rented out every room and never made a mortgage payment on it. Saved like hell and rolled it into many more investments out of state once CA got too expensive.
My first investment property was a 4bd/2.5 bath townhome that I purchased for $205k in North Carolina. I lived in the property for a little over 2 years while renting out the other three bedrooms. I’ve now transitioned into renting the whole property out. So far, I haven’t had any major issues, besides having to evict one tenant. I’m partly to blame for that situation though because their credit score was horrendous and the security deposit check bounced even before the lease begin, but I believed the sob story and let him stay anyways. I still have the property and I don’t see myself selling it anytime soon (long term buy and hold). It cash flows pretty well on a 20 year mortgage. Looking to buy another one hopefully in the near future.
Warsaw, IN · Member since 2017 · 229 posts · 270 votes
6y
@Charlie Anne
My first purchase was originally a SFR converted into a triplex, purchased in late 2017. I still have it, and it's done well. I was looking to get a Line of Credit on it pre COVID-19 (came under contract on a property just when we were going to get started, and as a business principle, we don't do two "deals" at once...full time jobs and young kids limit our attention to detail).
We haven’t reengaged the Line yet.
What do I wish I knew then? I wish I realized that MF with different unit types attract different tenants. That triplex has a 2/1, a 1/1, and an efficiency. Said differently, one unit attracts a single professional or working couple that is somewhat interested in entertaining, a different unit attracts a family, and the last attracts a single person that has no long term interest in either of the above. It’s worked out so far, but I attribute that to luck rather than skill, and I consider unit types more now than I did then.
Great discussion topic BTW, thanks for posting and good luck to you.
My first investment property purchase was a 3 bed, 1 bath condo for $49,000. It was a foreclosure. It has gone very well. I have owned it for 8 years now. If the right opportunity came I would consider selling it and doing a 1031 exchange. However, it cash flows very well (mainly due to the purchase price) which means that I'm fine holding it longer.
It is located in Newport, MN, which is south of St. Paul. I can't think of anything that I wish I knew at the time. I'm glad I made the decision to jump into real estate investing. I wish that I was more aggressive over the last 8 years both in terms of expansion and how I handled the properties I have owned. I have been too relaxed about increasing the rent amount.
Now I am at a point where I have to decide how to expand. I have 7 "doors" now.
Would you say that being more leveraged at a young age is worth it so that you can retire faster from portfolio growth? (Obviously you need cash reserves first.)
Real Estate Agent · Naperville, IL · Member since 2014 · 196 posts · 130 votes
6y
First purchase was straight out of school. 3 bed 2.5 bath townhouse at the peak of the market in November of 2007 for 205k in Grayslake, IL. Probably dropped to about 50k in 2010-2012. Worth about 180k now. I owe about 90k on it and have rented it out for 10 years. Cash flow positive but still not to peak market value yet. This wasn't an investment but turned into one...not a good one but one I still have.
First actual investment was much better. Bought for 40k and sold for 178k. Was forced to sell due to deconversation. This was in chicago loop.
Rental Property Investor · Chandler AZ and Sylvania, OH · Member since 2009 · 708 posts · 561 votes
6y
First property was a 1 bed 1 bath 600sqft condo in Chandler AZ. Started as a unfurnished rental and then converted it to furnished after 2-3 years and then sold it 2-3 years later as the Phoenix STR market saturated. I wish I knew what small MF were back in 2009, I would have focused more buying in that category rather than condos and SF.
At a young age leveraging can be a phenomenal way to grow or even begin your real estate business. It does however involve a lot of discipline and strategy. I myself started my real estate journey at an early age using various ways to leverage.
Rental Property Investor · Bloomington, MN · Member since 2019 · 404 posts · 542 votes
6y
@Stephen Brown Very good question. I’m torn on the response. Because on the one hand I do think that young people should be willing to leverage themselves more because a failure at 30 is easier than a failure at 60. But that’s easy to say and harder to accomplish. If I was more leveraged I wouldn’t be able to sleep as well at night.
When I said that I wish I was more aggressive historically I meant that in a few specific examples in my life. When I bought my first property it was not an investment property. (So not the one I mentioned earlier in this thread) I bought a condo for $105k that I lived in. At the time that I was searching I was approved for a higher loan amount. There was a 4-plex that I looked at for around $200k. 2 units were already rented, 1 unit was ugly but live able, and 1 unit needed rehab. If I could do it all over again I would have purchased the 4-plex, lived in the ugly unit while fixing the rehab unit to rent that one. Then fix the ugly unit to rent that and move on to another place.
I also had a period of 4 years where I did not focus on real estate as my wife’s job took us to another state for 2 years. I held off investing further because I was not sure where life would bring us next. We knew we would only be there for 2 years and the next location wasn’t known. That place was Kansas City. We went to many open houses and I ran lots of numbers. The numbers were great but I couldn’t get myself to the finish line because I did not want to be a long distance landlord. Again, hindsight is 20-20. I should have purchased the 4-plex when I was starting out and I should have purchased properties in KC when I lived there. Purchasing in KC is still an option, but would have been perfect 5 years ago.
I can’t change the past though. So I’m trying to make the right moves now to get to financial freedom.
Where was it? - Tempe, AZ just a stones throw away from Arizona State University campus (the largest uni in the US)
How did it go? - Still own and manage it 17 years later. Mostly been a positive experience with extremely low vacancy and high rents relative to the rest of greater metro Phoenix. Case in point I was getting $2000/month in 2006 for a 3/2 house while the rest of the market was maybe at $1300?
Do you still have it? - Yep still own it
What you wish you knew? - You learn a ton by self managing, but it can also be a lot of work at times. Know what your time is worth and leverage outside help when your time is more valuable than doing something yourself. Also, know when it's the right time to sell and buy (or exchange) into a better performing asset. I may sell the house this summer and do a 1031 into something else - I have no emotional attachment even though it was my first rental that launched my real estate journey.
Property Manager · Los Angeles · Member since 2019 · 16 posts · 6 votes
6y
@Charlie Anne My first purchase was a 2/1 single family home in a C neighborhood in Milwaukee, WI. I negotiated the price down to $52,500 from $55,000.
The deal went as smoothly as I could have hoped being an out of state investor. No major issues with inspection, it was an off market sale and the property was already being managed by my brokers management company. After all was said and done, 33% CoC return and 1.43 RTV.
If there was one thing I wish I had known when I started, it would be that no matter how good of condition you think the house is in, there are going to be R&M issues that come up, and to budget accordingly.
Best of luck to you on your first rental purchase!
Flipper/Rehabber · Milwaukee, WI · Member since 2016 · 153 posts · 84 votes
6y
My first purchase was a house hack Duplex in Milwaukee, WI in 2017. I bought the property with a 3.5% down FHA loan and I still own and live in it today. I am actually finally looking to refi out of the FHA loan soon.
One thing I wish I knew is how much certain rehab items should cost. I think I over paid for a few things in the remodel I did right when I bought the place. At the end I had a great product that appraised last fall for $40K over what I bought it for so really good investment so far. Spend the extra time to figure out what remodel items should cost if you're not familiar. Post on BP or other REI groups and ask for feedback on what different things should cost and get suggestions. Google can probably get you a long way. Buy economy grade products that will hold up well. I don't advise buying "cheap" stuff because you will pay the price down the road for replacement. The 4 family I just bought was maintained as cheaply as possible for many years and it show (which is why I got a great deal though). Now I am going through and fixing things "the right way".