Brandon's 100 day challenge??? I did it in 81........
March of this year I had a conversation with my Uncle that consisted of terms like "1030 exchange" and "gross rent" and other terms I had no clue what they meant. He sent me a few podcasts from this website I had never heard of...Bigger Pockets??? I listened. Then I listened some more. Then the bug bit me and I couldn't itch fast enough. I watched @Brandon Turner's webinar on April 6 and he challenged the viewers to buy their 1st/next property within the next 100 days. I closed on my duplex on day 81.
Here are the numbers......
Purchase price $300 k
Conventional mortgage 10% down with no PMI
vacancy 3% (vacancy is almost non-existent in this BYU town) $69
repairs 5% (I bought it fully remodeled) $115
cap ex 8% $184
other expenses $50 (internet I provide for my tenants)
gross monthly income $2300 ($1400 upstairs for a 3/1 and $900 down for a 2/1)
cash flow $274.39
cash on cash ROI 8.23%
The thing I did not add in is PM, because I will manage it myself. But, from here on out every deal I analyze will have 9% PM included.
"Some people want it to happen. Some wish it would happen. Others make it happen." Michael Jordan
Coco
Most Popular Reply
Let me give you an example:
In 2009, I bought a duplex in San Mateo, ca for 425k. 1600 sf or so. Similar to what you bought, but in much worse condition.
Total rent is $3300 for both units, after some simple remodel. 20% down, about $340 k loan. 30 year fixed. Monthly mortgage, property tax, insurance about 2400. Monthly cash flow about -900.
I was a newbie and did not even know what capex was.
The house is very old, built in 1919.
Foundation is settled. Windows are bad. Paint are peeling.
We spent about 15 k to do some basic repairs. At that time, I did not know much about REI nor construction. A lot of the work was done poorly by contractors.
However, now, the rent is $6500. Property values at 1.2 -1.3m.
Now, I learned so much from my own mistakes.
The key is location. Minor mistakes as a newbie can be overcome later with experience.
The only two most important thing:
1: timing
2: location
The house is of no concern to me now. Whether it is good or bad, I do not care. Because all those deficiencies are easy to fix. The only thing that can not be fixed is timing and location.
If there is a fire that burns it down, I can rebuild a brand new for $300 k, and the new house would be worth around 2 m.
From the picture of your duplex, it is in a nice neighborhood. That is what counts.