My first deal

[Joe Butcher]

I got through my first deal....well, I don't have it rented yet but wanted to share some of the details and then talk a little about why it was such a great learning experience.

ARV: 94K

Rehab: 29K

Purchase price: 39.5K

Rent is $1050/mo although I may lower it to $1000.

Taxes: $166/mo

Ins: $70/mo

P+I is about $380

Im putting away $150/mo for vacancy and maintenance. Some will say that should be higher, but I got all the major items fixed in the rehab. I can still adjust that if I want, as current numbers cashflow about $230.

I took a hard money loan at 14% with 3 points. Refi'd into a conventional loan (we close on the conventional early next week)

Total amount of the conventional loan is $66,875 at 5.25% 30 year fixed.

I rolled just about all the associated costs into the loan with a couple exceptions. I paid cash for the following: 3K for the foundation repair. I bought the appliances (stove and dishwasher) for about $300 (got a super deal on used appliances)

I spent maybe $200 getting the yard looking nice. I paid $800 to fix an unforeseen plumbing issue.

I acquired the property from my yellow letters. So that was a good lesson in marketing and sales. Talking with so many people on the phone and making offers taught me a lot....mostly about building rapport and negotiating. I think it was @Aaron Mazzrillo who suggested reading anything by Herb Cohen, which I did and really got a lot out of it. I don't think people realize how important it is to study sales and negotiation.

I lost one deal to another investor because of my inexperience, but that was a lesson in itself.

I learned how to get a hard money loan, how to do a rehab estimate and how NOT to do a rehab estimate. My original estimate was....get this....$5000. Boy was I wrong. I'm glad I didn't try and wholesale this as I would have made a fool of myself.

I was expecting the final appraisal to come in much lower, so it was a nice surprise when it came in over 10K higher.

Another nice thing was that the GC I used has done a lot of deals with the HML I used. The HML paid the GC directly, so I didnt have to take any draws or pay out of my own pocket, which is good because I couldn't afford to.

Any thoughts here? Am I missing anything?

I'll post pics here in a minute.

Thanks

[Cory Melick]

Awesome work Joe. The quality looks amazing.

I will be closing on my first rental property in July. We'll have to do a toast when we get our first rent checks!!!