After 3 months of marketing I received a lead from one of my bandit signs.  The call came from the sellers boyfriend, stating that the seller's house was full of "bad memories" from a previous marriage and that she was motivated to sell. I got in my car and drove to her house and we spoke about how I could help her move to Florida by purchasing the house. She owned the home free and clear so her price point seemed flexible. I gave a ballpark offer of 115k as I started my due diligence. After a couple of walk throughs, I determined that the house would need all new flooring along with paint to make it rent ready. I asked if 106k was reasonable. The sellers boyfriend didnt think so and wanted a better price in return for putting the new floors down. I denied. After an altercation and a couple of tough conversations, she agreed on 106k. A week after the contract was signed, the seller called and tried to get out of the deal. I suspected that a better offer was submitted and she wanted to take it. I ran my contract through an attorney to double check its validity, since I had done all of the negotiation and forms myself. It was a 100% valid contract and they had no right to exit. Luckily, they had a change of heart and were pleasant to deal with leading up to closing. The boyfriend started smoking in the house a week before closing, but besides that... they didn't make any more trouble. Overall this was a great first experience for me. The property is only five years old and in a great location. 

I financed the property with a conventional 30 yr mortgage at a 5.75 interest rate, 20% down. This was an awesome time to come across the deal because my debt to income was still in good standing. Moving forward, I will have to get more creative with my financing. I was expecting 7k in repairs and improvements. After deciding that the flooring could handle a bit more abuse, that number became 4k. After some landscaping, carpet and paint, handyman work, professional cleaning, and photographs, it cost me 3.7k. The financials and yearly expenses:

Purchase Price: 106k

ARV: 146k

Financed: 84.8k

Down Payment: 21.2k

Improvement Costs: 3.7k

Mortgage: 495

Property Taxes: 910

Insurance: 1300

Property Management: 1535

Vacancy Rate (7%): 1050

Repairs: 450

CAPEX: 720

Cash Flow: 258 per month

Rent: 1250

Cash-On-Cash ROI: 12.29%

ROI: 16.61%

The appraisal came back at 146k. My plan is to use the property as a financing source for another property. A BRRRR is the train of thought, but instead of the refinance I will be going with a HELOC. The HELOC appraisal came back at 156k and I was approved for a 40.8k line of credit. I'll be closing on the HELOC next week and September 1st is when the tenants will move in.

Thanks,

-Paddy