Closed on first rental property

Closed on first rental property

Investor · Gilroy, CA · Member since 2016 · 255 posts · 195 votes

Hello all. I am excited to announce that I closed on my first property. The means for which I accomplished it was not how I envisioned, but it is done. Firstly I'd like to state that this first property was done using a baby step approach, turnkey. While not the full the process of rehabbing and refinancing like the BRRRR approach, it did offer me a good understanding of the process within my constraints (time being the big one).

I approached this property like I did when I was looking on my own before I discovered turnkey. I found properties I liked with a turnkey company that I was comfortable with. I ran the numbers on my own to compare to their numbers. I asked many questions and researched the neighborhoods using www.city-data.com, crime sites, Google street view, and of course asking questions on BiggerPockets. I made sure to follow my target area, Memphis, with my keywords, which allowed me to discover who could help me online. I also researched the turnkey companies on the BBB, on BiggerPockets and via searches on Google. Phone calls were also helpful as were the many e-mail exchanges.

I now own a nice SFH. It cost $75,000 and after maintenance reserves, vacancy reserves, PM fees and PITI I manage a 12% COC. I am happy with this.

The main things I have learned from this experience are to use inspectors on your home as many times as you need to. This is vital when using a turnkey to ensure there is no deferred maintenance. The other is to get quotes for anything you may need (inspections, insurance, taxes PM fees) ahead of time. My closing costs predictions were close overall, but I found that my insurance prediction was off significantly as was my home inspection cost. I got lucky here that my lender was able to come in way under on their predicted closing costs.

Using a turnkey was a little odd for me at first. After researching Rent to Rewards, which is run by @BertMiller and @HansGuenther, I became very comfortable with paying to have a very easy transaction. The turnkey process through them was seamless; they made many concessions to speed up closing and addressed all my issues quickly. The even managed to negotiate the contractor paying for my inspector to return to the property to verify maintenance was completed. I received the property with no deferred maintenance. This was huge. They never rushed me and even reached out to me personally after the transaction to ensure I was satisfied. Highly recommend these guys.

I’d like to thank the many people on and off BP that helped me accomplish this:

@DavidHutson @DouglasSkipworth @JamesMartin

@DavidHutson gets special credit for meeting me in person and fielding my phone calls, e-mails and text messages on all questions minor and major. Thanks!

I apologize that none of my name links are working. Hopefully credit is received where it is due. 

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Port Coquitlam, British Columbia · Member since 2016 · 7 posts · 3 votes
10y

Congrats!  I just joined BP, this is my first post and i hope to post something similar in the next 3-4 months.  

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  • Port Coquitlam, British Columbia · Member since 2016 · 7 posts · 3 votes
    10y

    Congrats!  I just joined BP, this is my first post and i hope to post something similar in the next 3-4 months.  

  • Investor · Gilroy, CA · Member since 2016 · 255 posts · 195 votes
    10y

    @JeffAppleby 

    Thank you. Just figure out what you want, research it, figure out the first step and the take it. Good luck!

  • Property Management · Memphis, TN · Member since 2009 · 667 posts · 362 votes
    10y

    Congratulations! Thanks for sharing your experience. 

  • Rental Property Investor · Tampa, FL · Member since 2013 · 404 posts · 421 votes
    10y

    congrats.  glad to help out.

  • Bobby KohlerPro Member
    Charlottesville, VA · Member since 2016 · 11 posts · 0 votes
    10y

    Congrats Alexander, I was wondering if you actually visited the property.

  • Rental Property Investor · Charlotte, NC · Member since 2016 · 293 posts · 88 votes
    10y

    congrats, that's awesome!!

  • Investor · Gilroy, CA · Member since 2016 · 255 posts · 195 votes
    10y

    I did not. I was comfortable with the walk through pictures plus my inspector visited three times and kept me up to date. Plus my inspector gave me a final report to confirm the maintenance was completed. Since the company I worked with offered no deferred maintenance the neighborhood and cash stream were more important. I did pay to have my inspector visit multiple times. This is a consideration to account for.

    The neighborhood details I could ask about and research. The money numbers I could estimate. 

    Consider it a cardinal sin, but I trusted the people out there I was working with. I would not do the same if I did not use a turnkey or the turnkey did not offer no deferred maintenance on the property. Trust was a big factor.

  • Bobby KohlerPro Member
    Charlottesville, VA · Member since 2016 · 11 posts · 0 votes
    10y

    That's great that you could have that level of trust in your inspector and TK provider.  Could you please elaborate a bit on the no deferred maintenance deal?  Is that like guaranteed for a set period of time?

    Thanks

  • Flowery Branch, GA · Member since 2016 · 23 posts · 7 votes
    10y

    Congratulations! Memphis seems to be an interesting and growing market. Did you ever ask for a video walkthrough?

  • Ocoee, FL · Member since 2016 · 15 posts · 4 votes
    10y
    Congratulations
  • Douglas SkipworthBusiness Member
    Rental Property Investor · Memphis, TN · Member since 2014 · 1k+ posts · 1k+ votes
    10y

    Congratulations, @Alexander Price!

    Next time you're in town looking at the property, let's grab a meal together with Hans and Bert.  Those guys owe me lunch anyway!

    Investor's Guide to Memphis Real Estate
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  • Investor · Gilroy, CA · Member since 2016 · 255 posts · 195 votes
    10y

    Video walkthroughs are offered. I did not do one. The floor plan was basic and the pictures were enough. plus the property came with a tenant so an additional walk through would have been a hassle. 

    As for no deferred maintenance many TKs offer this with a guarantee. My guarantee is for 2 years. 

  • Investor · Gilroy, CA · Member since 2016 · 255 posts · 195 votes
    10y

    @JoshuaYoung I take that back, there was a renovated walkthrough my wife watched that she later showed me some. It appeared to be pre tenant but post rehab.

    @DouglasSkipworth Hopefully when I visit Memphis I will be looking at multiple properties that I own. I will definitely try to touch base with you and others that helped. Including Parker.

  • Investor · Houston, TX · Member since 2015 · 233 posts · 188 votes
    10y

    Congratulations @Alexander Price. It's a great feeling. Just getting started is huge. Wish you more success. 

  • Orlando, FL · Member since 2016 · 17 posts · 1 vote
    10y

    congrats. Every post that I read about this makes me want to pull the trigger and get my first property!!!

  • Investor · Forest Hills, NY · Member since 2016 · 7 posts · 0 votes
    10y

    Could you please share the name of the TK provider that you had such a great experience with. I am planning to do the same thing you have just done. Thank you.

  • Investor · Gilroy, CA · Member since 2016 · 255 posts · 195 votes
    10y

    @galinakrichmar

    Rent to Rewards based in Memphis. You can Google them.

  • Logistics Manager · Cordova, TN · Member since 2014 · 157 posts · 32 votes
    10y
    Wow !!!!! Thanks Alexander Price for sharing !!! This is so motivating :-)
  • Investor · Memphis, TN · Member since 2013 · 741 posts · 845 votes
    10y

    Congrats and welcome to the game!

  • Investor · Gilroy, CA · Member since 2016 · 255 posts · 195 votes
    10y

    @Galina Krichmar @Josh Young @Bobby Kohler

    Now that I am typing from a computer which will allow me to use @mentions I'd like to let the people who asked questions know I tried to answer them above. 

    That said, I was turned onto the TK option, specifically in Memphis, by @David Hutson. I can answer specific questions about this transaction, but if you guys have questions in general about Memphis turnkeys, he is the man. He invests via turnkeys in Memphis actively. He mentored me and got me lined up with two TKs out there. Not only that, but after guiding me, he took the time to look at my analyses, my property selections and to introduce me to many of the great persons out in Memphis. He even was supporting me via text while I signed my closing documents. Part of the success of the deal was due to him.

    Hopefully this gets people excited about one of the many ways to invest in real estate, and lets them know there are many people out there willing to help.

    Good luck all!

  • NY · Member since 2015 · 101 posts · 43 votes
    10y

    Congratulations!!

  • Bulawayo, Zimbabwe · Member since 2015 · 1k+ posts · 253 votes
    10y

    congratulations on the first rental @Alexander Price. keep it up

  • Cincinnati, OH · Member since 2016 · 14 posts · 1 vote
    10y

    @Alexander Price congratulations man! Very inspiring and motivating. I will definitely keep these guys in mind when I get the guts to invest remotely lol. I might have missed it but what financing did you use? Thanks in advance! 

  • Investor · Florissant, MO · Member since 2016 · 15 posts · 5 votes
    10y

    congrats brother! 

  • Tzvi BalsamPro Member
    Investor · Brooklyn, NY · Member since 2016 · 226 posts · 45 votes
    10y

    Congratulations 

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