First deal, nervous, excited, whats next?

13 Replies

Hey everyone, first discussion on here. My fiancé and I made our first real estate purchase in May. We got a nice multi family, 2 unit home. Basically, we're real excited. However, I'm also nervous, and just curious how things go after. We have tenants, not worried about that, been here for a long time prior. I am simply looking for advice moving forward, how to get started on my next move, especially when we have little money now, and cant get real cash flow until we move. What are some things people have done to increase value of the properties they have as well, in similar situations. I'm not really sure, just looking to get a discussion started, and learn some. 

Thanks, 

Matt

@Matthew Roberts

What's your plan for this property, is this your forever home or you plan to sell it in 2, 4, 6 years?  Who is your market if you sold, investors, first timers?  What do they want when they look for a deal?

Whatever your "end" is, that's what you keep in mind, start there and work backwards.

If it's a forever home, or lot at least, your way forward is probably different than if you're planning to slow flip it.

Originally posted by @Tyler Mullen :

@Matthew Roberts

What's your plan for this property, is this your forever home or you plan to sell it in 2, 4, 6 years?  Who is your market if you sold, investors, first timers?  What do they want when they look for a deal?

Whatever your "end" is, that's what you keep in mind, start there and work backwards.

If it's a forever home, or lot at least, your way forward is probably different than if you're planning to slow flip it.

 Looking to keep the property as a rental. Not forever home.

Keep the place in great condition at all times and when a tenant has an issue, address it right away.  This will keep the property occupied, and when a tenant finally does leave, having it look great will get it rented right away. 

I suggest start by Paying yourself rent! Wherever you were living prior cost you money every month. Now that you got help with the Mortgage from your tenants pay yourself the amount you paid for rent prior for your next deal!!! Congrats on taking action!

I think of every property I buy as a "slow flip", I don't even try for the home run, I'm playing Moneyball.  My goal is to buy what flippers say "does not have enough meat on the bone", a B- condition on the surface property but with good internals, in an A neighboorhood, then fix it up over time so that it's better than average.  Then I either get better than average rents or I'll sell it.

First I repair/replace things, if needed, that cause more damage (to property or life) if they fail, roof, water heater, plumbing & electrical... anything health and safety related.  That's to protect the investment and ensure one random event doesn't implode the whole deal.

Then I look to do lower cost (to me) but high effect (to a tenant) items, paint, flooring, appliances, new gravel on a driveway...

A few years into it, even if values in that neighborhood have also grown by then I should have a house above the mean rather than below.  Then it pays to have the hardwoods refinished and the windows replaced, stage it and sell it!

Doing things in the right order matters as in most rental markets it would be harder to get good investment returns for example on refinishing hard wood floors for a rental... buyers appreciate/expect refinished floors more than the typical renter... you also would not want to have 5 years of wear on refinished floors to then put it up for sale.

Do all that and in 5 years you can still decide to keep it you will likely have massively increased the appraisal value, do a COR and fund your next deal.  If it's a buy and hold then your "end" to keep in mind is your rental market.  What is it asking for?

@Matthew Roberts

Congrats on the deal! Like already stated in the thread address tenant concerns quickly, and once they leave fill the vacancy quickly- 

If there is work to be done, you can make it a "live in flip" and start doing changes your unit. 

For the next property, take care of this one, and down the line you can possibly look to refinance (if the numbers work) so you can have capital for the second deal. 

Originally posted by @Dahrian Barrett :

I suggest start by Paying yourself rent! Wherever you were living prior cost you money every month. Now that you got help with the Mortgage from your tenants pay yourself the amount you paid for rent prior for your next deal!!! Congrats on taking action!

 We still have part of the mortgage to pay ourselves. Not pocketing any really. BUT, we are still able to do this, and this is a great idea. Thanks for the input!

Originally posted by @Steve Bracero :

@Matthew Roberts

Congrats on the deal! Like already stated in the thread address tenant concerns quickly, and once they leave fill the vacancy quickly- 

If there is work to be done, you can make it a "live in flip" and start doing changes your unit. 

For the next property, take care of this one, and down the line you can possibly look to refinance (if the numbers work) so you can have capital for the second deal. 

 Have already made changes in our unit. New countertops, floor in bathroom, kitchen sink, added microwave. getting rid of old deck and making patio, closed fence in. Going to do the same on the other side. Will paint the trim as well to make more modern looking. 

@Matthew Roberts

I'm in the same boat. I closed in September with the intention of fixing fast and refinancing. I've been fixing slow. House has good bones so that's ideal but cosmetically was stuck in 1960. I've been taking down wallpaper, repainting, doing some landscaping, refinished all the floors after taking up the rugs and have the plan to update both kitchens and my bath. Hopefully at that point I'm able to cash out refi and buy another. I've been using the rental income to update the property so I'm also not banking anything at this time so a good refi will be very important for my potential next deal.

Congratulations on your first deal! The first one is scary for all of us. You'll look back at this and realize just how minor these issues are compared to other homes you get inspected. Good for you for not letting fear get in the way of pursuing a potential deal! It's easy to talk yourself out of taking action. Good luck to you!