First Investment Property

61 Replies

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $143,000
Cash invested: $37,000

This is a beautiful, 4-unit apartment complex in a stable rental market of Kettering, OH. All four units were renovated by the previous owner, who bought the property for $90,000 on a shortsale, 5 years prior.

What made you interested in investing in this type of deal?

As I was informed by my previous real estate agent, multi-unit properties are cash cows for those interested in investing in real estate long-term. This property is no exception. It's being rented (all four units) for well-below market rates of $525/month, yet still raking in $790/month of cashflow. After electrical, gas, and other expenses, the total net income is around $550/month, but with room for about $400/month of growth.

How did you find this deal and how did you negotiate it?

I found it through my real estate agent, Colleen Carr, who herself found it on the MLS. She took me out one day in November of 2018 to look at four separate 4-unit complexes. This one was head-and-shoulders above all the others in terms of quality and price point. It was already well below the price of the other properties and in much better shape, but Colleen was able to negotiate an additional $3k off the purchase price, and get $1500 at closing for various repairs.

How did you finance this deal?

25% down conventional loan for investment properties. 6% interest rate, due to credit checks from my previous home acquisition lowering my credit score slightly (could refinance later if we hit another low in the market!).

How did you add value to the deal?

So far I have ordered the repair of the vinyl siding, placed a metal dish under the water heater to prevent corrosion due to leakage, and plan on eventually re-paving the entirety of the driveway, garage, and sewer drains. Various other repairs are slated for later dates as well.

What was the outcome?

I purchased the property with some help from my parents, intentional co-investors in this property. They intend on carrying out this same process with me for 1 property per year, for the next 6 to 10 years.

Lessons learned? Challenges?

Getting started in real estate, like almost anything else worthy of your time, requires you to take action. You can't simply sit on the sidelines for years, researching. You get analysis paralysis doing that. Get a real education in the school of life. My down payment on this property was equivalent to 1 year in college, and it suited the education I received in so doing. For those afraid to start, as Shia Labeouf says, "DO IT! JUST... DOOOO EEEET!!!"

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

1. Real Estate Agent: Colleen Carr

I highly recommend Colleen to anyone trying to purchase properties in the Dayton area. She is very good at what she does. Ranked top 50 agents of the greater Dayton area.

2. Mortgage Broker: Phil Forbes

He has gotten me the very best mortgage rates possible thus far, and always finishes the mortgage process well ahead of closing.

@Payton Pearson

Thanks for sharing! You are absolutely right sometimes you have to dive in.

@Grant Rothenburger Indeed, I informed them that if they kept this process up with me for 6 to 10 properties over the next 10 years, they'd have about 1800 to 3k in passive monthly income completely stress-free. That doubles what they'd be able to take out of their savings every month for 10 years, AND they will perpetually get the income. Suffice to say, they're pretty happy :-)

Thanks for sharing @Payton Pearson . I asked my realtor to start sending me deals from Dayton, OH too. I hope I can find a deal there soon.  I might try to connect with Colleen Carr to see if she has anything that she can send my way.

Looking forward to hearing more from you in the near future!

Sincerely,

Eddie Espinal

@Grant Rothenburger My general strategy with this is thus:

1. Set a date--maybe a year out--when you will make your first property acquisition.

2. Research as much as you physically, emotionally, mentally, spiritually can handle. Learn all the numbers, reference all the sources, find all the appropriate mentors, EVERYTHING! Throw EVERYTHING you have at learning all possible things about your field (in this case, real estate).

3. Once that date comes, CHARGE! Go out there, find a property that fits your business model, and buy it!

If you follow this process and fail at any one of the 3 steps, then you probably aren't interested enough in real estate to actually attempt growing in it. It's a win-win, and you took a year to figure it out. Setting a date drives you with purpose and dedication, and your resolve to accomplish the necessary prerequisites before that date are an indication of your success. If you don't charge when that date comes, you don't have the killer instinct to succeed, and therefore need to work on yourself before you can jump into this.

I am a student, but am learning as rapidly as I can.

@Shawn Krieger Heh thanks! Yep, as I stated above, I'm throwing everything I've got at it. I have a VERY aggressive business model that I need to keep up with. The only way to do so is to swiftly and wisely find appropriate investments in which to put my money.

@Eddie Espinal I have a friend by the name of David Leeds who is also into rental property investing that may be interested in meeting you.

I’m interested In getting in on these oh deals get me involved 

@Payton Pearson  

I like the strategy, a lot, I'm sure you and the parents do too! Not surprising how well you thought this out, being an engineer and all.

Looking forward to more updates on the next ones! 

Originally posted by @Payton Pearson :

@Shawn Krieger Heh thanks! Yep, as I stated above, I'm throwing everything I've got at it. I have a VERY aggressive business model that I need to keep up with. The only way to do so is to swiftly and wisely find appropriate investments in which to put my money.

Do you have a side job

@Shawn Krieger Many. I do Varsity Tutors, drop shipping with a company called Reseller Consultants, transcription services with a company called rev (rev.com), Postmates, I rent out a room of my current residence, I do research studies on my base which brings in roughly 200/month, and another opportunity of equally great measure to my real estate ambitions.

I must aggressively grow. You don't become a billionaire overnight, nor do you become a billionaire perusing Facebook all day. You need to take risks (sometimes very big ones), and hustle as much as you possibly can.

Originally posted by @Payton Pearson :

@Eddie Espinal I have a friend by the name of David Leeds who is also into rental property investing that may be interested in meeting you.

 Awesome, can you please introduce us if possible. Is he on BP?  If not, I can PM you my contact info. 

Thanks again!

Originally posted by @Payton Pearson :

@Grant Rothenburger I have another on the docket right now. Will close on the 4th of April. 4-unit apartment complex in a very high-end neighborhood.

 Heck yeah! Are these in the same area?

@Payton Pearson “BiggerPockets University “ is great! Lol only $30 bucks a month or less. Great lessons and community. Nice property, congratulations!

Originally posted by @Payton Pearson :

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $143,000

Cash invested: $37,000

This is a beautiful, 4-unit apartment complex in a stable rental market of Kettering, OH. All four units were renovated by the previous owner, who bought the property for $90,000 on a shortsale, 5 years prior.

What made you interested in investing in this type of deal?

As I was informed by my previous real estate agent, multi-unit properties are cash cows for those interested in investing in real estate long-term. This property is no exception. It's being rented (all four units) for well-below market rates of $525/month, yet still raking in $790/month of cashflow. After electrical, gas, and other expenses, the total net income is around $550/month, but with room for about $400/month of growth.

How did you find this deal and how did you negotiate it?

I found it through my real estate agent, Colleen Carr, who herself found it on the MLS. She took me out one day in November of 2018 to look at four separate 4-unit complexes. This one was head-and-shoulders above all the others in terms of quality and price point. It was already well below the price of the other properties and in much better shape, but Colleen was able to negotiate an additional $3k off the purchase price, and get $1500 at closing for various repairs.

How did you finance this deal?

25% down conventional loan for investment properties. 6% interest rate, due to credit checks from my previous home acquisition lowering my credit score slightly (could refinance later if we hit another low in the market!).

How did you add value to the deal?

So far I have ordered the repair of the vinyl siding, placed a metal dish under the water heater to prevent corrosion due to leakage, and plan on eventually re-paving the entirety of the driveway, garage, and sewer drains. Various other repairs are slated for later dates as well.

What was the outcome?

I purchased the property with some help from my parents, intentional co-investors in this property. They intend on carrying out this same process with me for 1 property per year, for the next 6 to 10 years.

Lessons learned? Challenges?

Getting started in real estate, like almost anything else worthy of your time, requires you to take action. You can't simply sit on the sidelines for years, researching. You get analysis paralysis doing that. Get a real education in the school of life. My down payment on this property was equivalent to 1 year in college, and it suited the education I received in so doing. For those afraid to start, as Shia Labeouf says, "DO IT! JUST... DOOOO EEEET!!!"

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

1. Real Estate Agent: Colleen Carr

I highly recommend Colleen to anyone trying to purchase properties in the Dayton area. She is very good at what she does. Ranked top 50 agents of the greater Dayton area.

2. Mortgage Broker: Phil Forbes

He has gotten me the very best mortgage rates possible thus far, and always finishes the mortgage process well ahead of closing.

 Payton, great job! Looks like a solid deal, congrats. Does your mortgage broker by any chance work elsewhere in Ohio too? I invest in Cleveland, always looking for good people to work with. 

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