Newbie Needs Help on His First Deal
Hey BP, I am a new investor who just turned 20 years old and after months and months of educating myself on anything and everything REI I have been really itching to actually put it to the test.
I have located an area that I feel is the best starting point for me as a new investor in my area. I have been really digging deep into the area's statistics and I drive through it every day on my way to work.
Last week my business partner and I found what we thought was a great rehab project in the area and in our price range and we went and checked it out with a local agent...well unfortunately, we decided it was too much work for our first deal, so we kept looking.
This week I've had my eye on a property but I would really appreciate some experienced guidance first.
The property is listed for $51K with 2 beds and 1 bath at nearly 700 sq ft and valued at $61K. It was built in 1941 and based on the pictures it seems to be in decent shape. Parts of the exterior need some paint as well as the interior, the yard needs some work, the kitchen needs new floors and new cabinet doors, etc. ( I have yet to visit the property in person but this is what I could gather from the pictures). Most, if not all, of the rehab work would be done by myself, by business partner, and my father.
As for the comps in the area the neighboring properties are valued at $67K and $70K, there are about 4 properties within a few blocks of this property for sale with the same specs that are all listed for $70K, there is a property 2 blocks away from the property that was just sold at $88K with the same specs, another property that has similar specs that is near this property that was sold for $86K and another property that was sold just 2 weeks ago that is 1 block away with similar specs for $75K.
With this information I put together what I thought would be a very reasonable ARV for the area on this property at $69,900 based on a very rough estimate of repair values at $5K-$10K.
I also just want it to be known that I am really not looking to make a HUGE profit on my first deal, I want to get some experience under my belt first but I don't want to lose money either. I know some of you shoot for $100K profit or so on your deals, but to start, my goal on my first deal is to profit at least $10K. With that, I have some questions on how to go about pursing this property, or my first property in general.
1. Being just turned 20 years old what would be the best way to finance a deal? (I have a grandfather who is into real estate investing who may be able to finance a few of my first deals, but I want to make sure I look at other options first.)
2. Is it probable that with that conservative ARV number I would be able to profit at all?
If you need any more info on the deal I have plenty of it, I just didn't want to make my post too long. Also, more details are to come on this as I plan to go visit the property this week.
I appreciate all your help BP Community!