My first deal, one year later.

11 Replies

Okay, so I purchased my first rental property, a 1br condo in Dec. 2012. I never posted this info because I had negative responses to even looking into such a purchase and wanted to see how it all panned out. It was a short sale with a asking price of $45k. Offered $38k bank countered with $45k..?? Got it for $38.5k appraised value of $55k. Rented it from April 2013 til present for $800 a month. Tenant never caused problems and was never a day late with rent.

Lease is up April 1st. She is not renewing. Would you guys sell in this situation or find a new tenant?

Did you finance the property or pay cash? Either way, it appears to be cashflowing well, so why are you considering selling so soon?

Since I did pay cash the $55,000 sounds so good right now...LOL. It did cross my mind to take the cash assuming it sold quickly and reinvest in a duplex.

I already have an add on CL for new tenant. Just want to here some opinions from people with different perspectives on what they would do.

My HOA fees are $280/mt, taxes $1500/yr. so cash flowing around $400/mt.

Totally understand. If you can sell it for the $55k and then pick up a duplex for that, in essence almost doubling you cashflow, that may be the right move!

Wish you luck!

Hi Joey.. it depends.. Maybe pull some cash out on the condo to put down on a duplex and you can keep the cash flow from both.. RE is on the upswing and Id hate for you to lose out on the cash flow from the condo.. I own a portfolio of condos that have been cash flowing from day 1.. They have appreciated over 100% since 2009.

Hi Joey,

If your condo is in a building that has a strong hoa and you are happy with the way things are run, you may want to consider keeping the condo and looking for another in that same building. You got yourself a great deal and are cash flowing quite good on it as a rental.

We starting buying condo's a couple years ago and now own 5. Our cash flow is pretty similar to yours. We also own 2 single family homes. The turn overs on the condo's are night and day easier and the problems are way less.

@Joey C. ...Consider pulling cash out instead of paying capital gains...You also might have to put $$ to get property ready to sell...Rent ready is quite different from putting it on the market..

Just more food for thought in case you haven't considered it...

You could avoid paying capital gains if you sell and purchase another rental (like purchase). I'm no expert on the topic, but a quick google yeilds: http://www.irs.gov/uac/Like-Kind-Exchanges-Under-IRC-Code-Section-1031

Have you also considered taking out a HELOC against the property? That would allow you to have access to the equity in case you really need it later, but you are not committed taking the money. So you could have the cash available if needed, but only if needed. If you later change your mind about needing/wanting the cash, just close the HELOC. You may only lose a small application fee.

Regardless, you have a few options and that's a good position to be in!

@Joey C.

Well done on your successful deal.

In order to keep growing a portfolio at a more rapid pace my strategy has been to buy. rehab and sell and try to keep and hold as many as I possibly can along the process.

The Midwest offers some great values and you could do quite a few things with $55,000.

Thanks and have a great day.

Originally posted by @Joey C. :

My HOA fees are $280/mt, taxes $1500/yr. so cash flowing around $400/mt.

What about expenses other than HOA fees and taxes? Even if HOA is covering insurance, you still have maintenance, vacancy, turn-over, capital costs, etc.

My guess is that your cash flow is closer to $200/month long-term, which on a $38,500 purchase is a return of about 6%. I think that HOA fee is really eating into your return, and if I were in your shoes, I'd sell and buy something that has better numbers.

Because of the wave of applicants that have responded to my Craigslist add in only one day I have decided to hold on to this property . I will have no problem at finding a new tenant. This way I won't lose any $$ in vacancy turn-over. I calculated my ROI for the first year of ownership and got close to 0%. I spent almost $4K in renovations which I think falls under capital expenses and maintenance. This year I should be at around 12%. I just inspected the unit and nothing has to be done. I also "claimed" $11K in itemized expenses for 2013 which got me with a healthy tax return.

Few weeks late on this post but what about a lease option? Take a down payment of 20k-30k for some cash flow and take a monthly. If they default, you get to start over. If they complete the purchase, you had a good run with it. Win/Win/Win

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