Updated over 11 years ago on . Most recent reply
Just signed the papers -- DFW sub2
Four months later, using the wisdom I found here, my husband and I just signed papers on our first investment house. The deal is subject to existing financing, so we are taking over a $114K loan on a house that is easily worth $145K and climbing by the day.
The seller is not someone I knew before joining BP. I randomly ran across a guy who wanted to get out of his house, and because I had been reading here, I was able to see the opportunity.
It took a couple of months to get my husband on board, but now he is as interested and invested as I am. He has worked in the mortgage industry for 15 years, so it's awesome to put his experience to a new use.
Our out-of-pocket costs were $400 for an inspection, and $1,200 to a lawyer. The house needs about $1,000 in work to become rent-ready. (Mostly a deep, deep cleaning). We expect to rent it for over $1,300. Our cash flow will be more when we refinance in a year or two, but it's still positive now (around $100-$200/mo).
We're now looking for No. 2! Thanks, BiggerPockets. I feel so good about the path we're on.
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For wraps in your own state, you may want to consult with a real estate attorney if you plan on doing more than 3 per year (thanks to Dodd Frank). The lease option method will still work perfectly though. With a lease option, you can get anywhere between $3k to $10k up front (nonrefundable), which she should set aside as "rainy day money" for the unlikely chance that the buyers back out (because if they back out at any point before the end of the agreement, you will be able to collect all missing rent for the remainder of the term). Send me a PM and I can email you the contract I use for my deals. It's a good one, which protects the seller 1,000%.
Oh and for the length, 24 months is ideal... any less, and you're setting your buyer up for failure.