What was your first deal? How much cash did you have

5 Replies

I am curious to know when and where you jumped into investing. I am trying to get out of analysis paralysis.

It was 2004. My father-in-law was a REALTOR in the town I eventually wanted to live in. I asked him about investment property and he told me about a townhome that he used to own. I bought it based on his recommendation. At the time, I knew nothing about calculating returns or being a Landlord.

We bought it for $67,000 with about 10% down and the rest financed. We got a tenant in and everything was going great...for two weeks. Sewer line backed up but the plumber snaked it and all was good...for a month. Sewer line backed up again, this time destroying the carpet throughout the downstairs. We spent nearly $6,000 putting in a new sewer line, replacing the flooring, and taking out the tree that had grown through the sewer line.

Everything was going good...for two months. I received a letter from the HOA saying my "special assessment" was due. They were going to replace the roof and siding. I called the HOA President and asked if this was already paid by the seller because nobody mentioned a special assessment. She told me all the information was passed to my REALTOR (my father-in-law) on more than one occasion but he failed to tell me about it. If this were any other REALTOR, I would have sued them and made them pay the special assessment. But it was my father-in-law so we sucked it up and didn't even say anything to him.

Long story short, I spent nearly $10,000 within the first three months of owning my first investment property. Insurance reimbursed me for nearly $5,000 of the sewer issue so I was really out only $5,000.

After that initial fiasco, we set aside all rent money and never paid for another repair out of pocket. We sold the unit 8 years later and cashed out nearly $60,000. Not a bad return.

@Tanner Carson - I did my first property as a live and flip and won it through auction.com and got financing.  I put down 20% of the purchase price $115k = $23k down.  I lived in it for two years and sold it and did not have to pay any capital gains tax.  Didn't really know what I was doing at the time, but it worked out great!  

Sometimes its just best to jump out of the plane and build your parachute on the way down.

I bought my first rental property at 23. I bought it where I went to college so I knew the market. This was back in 2000 so the lending landscape was the Wild West. I bought it as a second home (even though I didn’t own a first) so I only had to put 5% down on the 92k purchase price. So $4,600 plus closing costs.

Reading that paragraph it’s no wonder the real estate bubble burst. :)

I’m getting back into real estate after taking a break while having kids. So I’m in the same boat as you...trying not to overthink things.

To help with analysis paralysis, read the Flip book by Robert Villani and Clay Davis. Even if you’re not flipping, it’s pretty exhaustive in its checklists, rules of thumb etc that can help shorten the analysis time for a BRRRR. You need to adjust their numbers for your local market (although I think they’re based in TX so they might be close for you) but it’s a good starting point.

Good luck. I’ve put in offers on 3 houses so far. Lost one to another investor, one the bank rejected as too low, and one I find out about tomorrow. I trust my numbers and try to not get caught up in the emotion. If I don’t get the deal at my price there will be another one in the future. There always is.

It’s exciting and scary at the same time. I try to enjoy that feeling. I don’t want RE investing to become bland and boring. Otherwise it would be like an office job.

@Tanner Carson  There is no perfect time to make your first investment. The time to leave the analytics behind and jump is when you take that first step and take the risk of learning with practice. Then leave your fears behind and jump.

Originally posted by @Nathan G. :

It was 2004. My father-in-law was a REALTOR in the town I eventually wanted to live in. I asked him about investment property and he told me about a townhome that he used to own. I bought it based on his recommendation. At the time, I knew nothing about calculating returns or being a Landlord.

We bought it for $67,000 with about 10% down and the rest financed. We got a tenant in and everything was going great...for two weeks. Sewer line backed up but the plumber snaked it and all was good...for a month. Sewer line backed up again, this time destroying the carpet throughout the downstairs. We spent nearly $6,000 putting in a new sewer line, replacing the flooring, and taking out the tree that had grown through the sewer line.

Everything was going good...for two months. I received a letter from the HOA saying my "special assessment" was due. They were going to replace the roof and siding. I called the HOA President and asked if this was already paid by the seller because nobody mentioned a special assessment. She told me all the information was passed to my REALTOR (my father-in-law) on more than one occasion but he failed to tell me about it. If this were any other REALTOR, I would have sued them and made them pay the special assessment. But it was my father-in-law so we sucked it up and didn't even say anything to him.

Long story short, I spent nearly $10,000 within the first three months of owning my first investment property. Insurance reimbursed me for nearly $5,000 of the sewer issue so I was really out only $5,000.

After that initial fiasco, we set aside all rent money and never paid for another repair out of pocket. We sold the unit 8 years later and cashed out nearly $60,000. Not a bad return.

WOW!!! This story is crazy, i think you have one for the record books there as a first property. Everything you mentioned is pretty much what terrifies me of diving in. How can i see roots in the ground? i guess nobody can right? Gosh, you are a good man to have not told your father in law anything or ask for help. I really respect that. I am glad it turned out good in the long run for you and thank you for sharing your story with me. Some definite things to take away from this post.

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