The "Watch the Flowers" House a First Deal
So I am a new investor just starting out. My wife and I agreed to take $100k and see what I can make out of it. I spent a lot of time reading and learning here on Bigger Pockets and reading all the books I could get my hands on. So I took the plunge and began meeting with investors in my area, and real estate agents. I spent a lot of time on the mls. I picked several promising candidates and visited them with my chosen agent.
Today we visited three houses. House numbers one and three are maybes. But, number two was a winner. Here are the details.
The resident is a 92 year old woman, and her son owns the house. He is selling it since she is moving in with him. We looked around the house and she was very pleasant. When I asked her permission to check out the back yard and garage, she said "OK, but watch the flowers." The back yard was neat and well maintained, the garage great. But there were no flowers.
5 bedroom 1 bath house. The house has been fully redone. Although one bedroom is very small and will be turned into a bathroom when it is time to resell. Maybe sooner I'm not sure.
List: 109,000
Offer: 100,000
Everyone knows what happens next right?
Contract 105,000
So now its off to the attorney review. The house needs almost no rehab. New locks, refrigerator, a washer and dryer, and garage door openers. I'm gonna do it all for less then $3000.
The property will appraise for $145000 is my thought, maybe more. And will rent for at least $2000. My agent says 2100 with the 2 car garage. or $2000 plus rent the garage to another tenant for $200 more.
It is in a flood zone. However, it is right on the edge of the non flood zone and has the second tier insurance.
I am financing with a conventional loan 20% down and paying the closing costs. The Property after all expenses and taxes. Accounting for 8% vacancy, 8% repairs, and 8% cap ex will leave a cash flow of just over $500/mos and about $60,000 in equity.
Now all I need to do is get out of attorney review without a problem, or second offer coming in. Keeping my fingers crossed. A great first deal. Or at least the start of a great first deal. I will update this post as the process unfolds. Any advice along the way is always appreciated.