0 to 11 Units in Three Months!
Like most people, it all started with Rich Dad Poor Dad. We very shortly settled on buy and hold rentals and started to soak up all the information we could get our hands on. We probably read 15 different books on REI and listened to dozens and dozens of the BP podcasts - side note, WOW is David Green good at interviewing!
We immediately began the process of getting a HELOC on our home, and after 2 or 3 false starts and crazy low appraisals, we were the proud owners of our very own line of credit. Within the week we found our first investment property, a SFH that had sat on the market for over a year, with mold in the basement, outdated everything and an asking price of $100k. There was a room in the basement that could be a fourth bedroom with an egress window installed - value add!
The agent told us that the seller had been inundated with offers well below asking and was ignoring them, so we offered 80k and settled at $82.5k. Closing took way longer than we were hoping, but four weeks later we started rehab. We put just over $15k into that house, and did a TON of work, looks beautiful now. Rehab was done in just over two weeks, and we are hopeful that our first tenant will sign this week. Rent is $1,350. The mold that scared everyone else off (I assume) was a relatively simple fix. Starting cash-out refi next week. Yay BRRRR!
In the middle of all this, we sat down for lunch with a wonderful older lady who owned three multi-families near our house in the hopes of learning from her experience. As we got ready to leave, we mentioned casually that if they were ever interested in selling their properties, we'd potentially be interested. She seemed receptive to the idea, and I told her I'd follow up every now and then. Long story short, we wound up having many hours of very enjoyable discussion in their living room, at the end of which we had a win/win for everyone. We went through many ideas of how to structure the deal over several weeks, and in the end settled on a seller financed deal with an incredible 30 year note at 4% with just $10k down. It was important to them that they continue to receive income from their investment, and it was important to us that the cashflow be significant enough to give us a cushion and also to justify the hassle and work that goes into owning the properties.
It's been a week since we closed and we've been very busy getting to know the existing tenants and filling 2 vacancies. There've been a few small hiccups but so far so awesome. We are thrilled and very fortunate and continually marvel at how all it takes is just getting started. You gotta open the door - but when you do... wow! Thank G-d!
Lessons learned: Materials are cheap, labor is expensive - unless you do it yourself. Even if something is cheap, when you multiply by 11, not so much; we'll be doing major upgrades slowly. It really is all about the numbers - except when it's about the person behind them. Systems, systems, systems. Home warranties pay for themselves - quickly. The lease is EVERYTHING. Don't be afraid to read a book. JUST START.