First investment property! Took action!!
Hello BP!!!
Well after many, many months of reading and educating myself from the wealth of knowledge here my wife and I have purchased our first investment property!
Ruby Door Properties, a brief history: I like many others on here began when I discovered BP and was impressed by the amount of education I could get at zero cost to me and was blown away by the generosity of others helping in the success of others. I began educating myself and listened to every podcast a few times and finally got the courage to presnt my findings and plan to my wife. We like many others were very risk averse and lived to the fullest of our means just staying afloat and never having lots of extra money. Once I explained everything to her she understood the black and white numbers REI works on. We're both involved in business for our jobs and have had a small business of our own for a number of years, so we understand the numbers fully.
Next up we partnered with a friend who is an agent and also an investor. He showed us his proprties and drove us through the neighborhood he invest in and explained why he invest there. We looked for several months at properties but didnt find any that fit our criteria. We were driving for dollars one sunday and came across another property we thought would work, contacted my buddy on Monday and the property has already been locked up by another investor. Bummed we went to his office to scour the MLS as he had another agent in his office that had a property listed that was dropping bi-weekly. So we ran some numbers and came up with an offer number that we thought the property might realistically sell for put in an offer well below that price to gauge the sellers desperation.
Ruby Door Properties Name: My wife's favorite color is red, upon a quick search online Red Door Properties was in use already. We were in the car talking real estate returning home from a family trip and Ruby by The Kaiser Chiefs(yeah we love alt/indie music) was on the radio and my wife told me the story of her Aunt Ruby, a Hollywood type who was always glamorous in all things and also sold real estate for a living. So we instantly thought we'd call the business Ruby Door Properties and yes all of our doors will be painted Ruby Red!
The Property: 1968 pier and beam house, 1344 sq ft. Agent had it listed as a 3/1. Listed in May at 42.9 dropping the price bi-weekly until we saw it at 29.9, we put in an offer of 10k and a few days later the seller came back at 19K. We put in another offer at 17K and it was accepted! We were stoked!
When we viewed the property we discovered an unfinished masterbath(this could be the reason for listing as 3/1) and knew this would be a huge value add. The master bedroom, master bath and laundry room were part of an addition to the original house. One of the original bedrooms off the living room was opened up and made into a formal dining. We closed up this formal dining room and now we have a 4/2!
So now you're thinking, what kind of house can you get for 17k, really?? So here she is sitting on her 150 X 50 lot. These befores are pretty rough but saw through all the clutter and could see the potential. First off the floorplan was awesome, split floor plan with a true master suite, vaulted ceiling in the living/kitchen/dining area which was all open like modern homes. Comes complete with an abandoned car in the front yard!
Laundry
Master Bedroom(after cleaning out tons of clothes/furniture/etc measures 19.5 X 13!! plus the walkin closet
Unfinished Masterbath including brand new tub/shower combo!
And the sweat equity begins!!
Filled a 20 yard dumpster in 3 days!
Buh-bye old nasty kitchen!
Framing up Bedroom 4
Scope of work:
Needs to be leveled and have a beam replaced between the kitchen and hall bath.
Needs a new roof(and resheath the original side of the house, 2/3 of house)
Full electrical update
Full plumbing update
Add central HVAC(was window units only before)
Full kitchen replacement including appliances
Sheetrock 3/4 of house due to damage
Full paint interior and exterior
Replace most windows
We're giving ourselves 6 months to complete this project. I have a friend who is a GC so he will be helping me out with the things that require a liscenced contractor.
Our plan to put in tons of sweat equity and try to come in at 50K including acquisition price. This should rent to 850/900 a month and monthly bills will be around 475 a month, cashflowing 375/425 a month. We are using the BRRRR strategy and will get this rented and after seasoning it will pull our cash out and repeat. Our plan is to get 10 properties online in 10 years and then begin to pay them off the next 10 years so in roughly 20-22 years when we retire we should have 9-10K a month flowing in from our properties. We plan to self manage these units to maximize cashflow.
My hope is to post update on a weekly basis as we are working a night or two during the week and working 6-8 hours each Sat & Sun., GC will get his work done weekdays. I hope you will follow us along our journey and perhaps be inspired to take action and get your RE investment career going. All feedback and suggestions are welcome!! Thanks BP community!!