First Deal Recap, Success or Dud??
New to Real Estate · Metro Detroit · Member since 2022 · 25 posts · 11 votes
First Deal Recap, Success or Dud??
Most Popular Reply
Nicholas L.Pro Member
Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votesthe problem for me here is the big down payment. if you had put a much lower amount down, and were break even or slightly negative, that might be OK - you're building equity without much capital tied up. i'm actually looking for seller finance deals where I can be 5% or less down and then break even. i'll do those all day.
but here, it sounds like you outlaid 70Kish (across down payment, closing costs, etc.) and now you're losing money. is that right?
14 Replies
- 1yNicholas L.Pro MemberFlipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
the problem for me here is the big down payment. if you had put a much lower amount down, and were break even or slightly negative, that might be OK - you're building equity without much capital tied up. i'm actually looking for seller finance deals where I can be 5% or less down and then break even. i'll do those all day.
but here, it sounds like you outlaid 70Kish (across down payment, closing costs, etc.) and now you're losing money. is that right?
- New to Real Estate · Metro Detroit · Member since 2022 · 25 posts · 11 votes1y
Quote from @Nicholas L.:
the problem for me here is the big down payment. if you had put a much lower amount down, and were break even or slightly negative, that might be OK - you're building equity without much capital tied up. i'm actually looking for seller finance deals where I can be 5% or less down and then break even. i'll do those all day.
but here, it sounds like you outlaid 70Kish (across down payment, closing costs, etc.) and now you're losing money. is that right?
@Nicholas L. I was about 63k out of pocket. I actually could have put lower down payment, since the seller didnt care much, but I did not want to be over leveraged. I also wanted to ensure cash flow positive (or maybe not). yes slightly losing money, as I also need to put a new roof on in next couple years.
- 1yJaycee GreenePro MemberReal Estate Consultant · St. Louis MSA · Member since 2024 · 3k+ posts · 727 votes
Quote from @Ethan Kohler:
Duplex purchased in 2024 - First deal, Turn key, traditional Side by side, 1980 build in good area (same suburb where I live)
Listed on MLS for $325k, accepted $300k on land contract with 20% down at 5.5% interest with 5 year balloon and 25 year am. Seller preferred land contract.
Initial rent totaled $2,360 and I raised this year to $2,660. Still a bit below market rent but tenants have been good/stable compared to what I have heard from other stories.
Taxes went up to $7,210 per year that I just paid. After taxes and a few other relatively small expenses, I am about $1,000 in the negative. Was it worth it....??
I'm sure the answer depends on perspective and long term goals. I preferred a better, value add deal, but those were tough to find and take on at my novice level. This seemed like a good deal in good area for first one under my belt, but it took capital and was something of a lateral play.
Feedback?? I thought interest rate was good, considering. But taxes took everything.
Hey @Ethan Kohler! What do you think you could sell it for now?
- New to Real Estate · Metro Detroit · Member since 2022 · 25 posts · 11 votes1y
Quote from @Jaycee Greene:
Quote from @Ethan Kohler:
Duplex purchased in 2024 - First deal, Turn key, traditional Side by side, 1980 build in good area (same suburb where I live)
Listed on MLS for $325k, accepted $300k on land contract with 20% down at 5.5% interest with 5 year balloon and 25 year am. Seller preferred land contract.
Initial rent totaled $2,360 and I raised this year to $2,660. Still a bit below market rent but tenants have been good/stable compared to what I have heard from other stories.
Taxes went up to $7,210 per year that I just paid. After taxes and a few other relatively small expenses, I am about $1,000 in the negative. Was it worth it....??
I'm sure the answer depends on perspective and long term goals. I preferred a better, value add deal, but those were tough to find and take on at my novice level. This seemed like a good deal in good area for first one under my belt, but it took capital and was something of a lateral play.
Feedback?? I thought interest rate was good, considering. But taxes took everything.
Hey @Ethan Kohler! What do you think you could sell it for now?
I'd say $320k. One is listed down the street for $380k, but it also has a garage for each unit, mine only has car port.
- 1yJaycee GreenePro MemberReal Estate Consultant · St. Louis MSA · Member since 2024 · 3k+ posts · 727 votes
Quote from @Ethan Kohler:
Quote from @Jaycee Greene:
Quote from @Ethan Kohler:
Duplex purchased in 2024 - First deal, Turn key, traditional Side by side, 1980 build in good area (same suburb where I live)
Listed on MLS for $325k, accepted $300k on land contract with 20% down at 5.5% interest with 5 year balloon and 25 year am. Seller preferred land contract.
Initial rent totaled $2,360 and I raised this year to $2,660. Still a bit below market rent but tenants have been good/stable compared to what I have heard from other stories.
Taxes went up to $7,210 per year that I just paid. After taxes and a few other relatively small expenses, I am about $1,000 in the negative. Was it worth it....??
I'm sure the answer depends on perspective and long term goals. I preferred a better, value add deal, but those were tough to find and take on at my novice level. This seemed like a good deal in good area for first one under my belt, but it took capital and was something of a lateral play.
Feedback?? I thought interest rate was good, considering. But taxes took everything.
Hey @Ethan Kohler! What do you think you could sell it for now?
I'd say $320k. One is listed down the street for $380k, but it also has a garage for each unit, mine only has car port.
@Ethan Kohler, in my opinion, I wouldn't worry about your cash flow situation at this point, as long as it doesn't negatively affect your day to day life. Are you planning to raise rents in the next year or two? Have you projected out what your overall return would be after 5 or 10 years?
- New to Real Estate · Metro Detroit · Member since 2022 · 25 posts · 11 votes1y
Quote from @Jaycee Greene:
Quote from @Ethan Kohler:
Quote from @Jaycee Greene:
Quote from @Ethan Kohler:
Duplex purchased in 2024 - First deal, Turn key, traditional Side by side, 1980 build in good area (same suburb where I live)
Listed on MLS for $325k, accepted $300k on land contract with 20% down at 5.5% interest with 5 year balloon and 25 year am. Seller preferred land contract.
Initial rent totaled $2,360 and I raised this year to $2,660. Still a bit below market rent but tenants have been good/stable compared to what I have heard from other stories.
Taxes went up to $7,210 per year that I just paid. After taxes and a few other relatively small expenses, I am about $1,000 in the negative. Was it worth it....??
I'm sure the answer depends on perspective and long term goals. I preferred a better, value add deal, but those were tough to find and take on at my novice level. This seemed like a good deal in good area for first one under my belt, but it took capital and was something of a lateral play.
Feedback?? I thought interest rate was good, considering. But taxes took everything.
Hey @Ethan Kohler! What do you think you could sell it for now?
I'd say $320k. One is listed down the street for $380k, but it also has a garage for each unit, mine only has car port.
@Ethan Kohler, in my opinion, I wouldn't worry about your cash flow situation at this point, as long as it doesn't negatively affect your day to day life. Are you planning to raise rents in the next year or two? Have you projected out what your overall return would be after 5 or 10 years?
Yes, I just raised each tenant by $200, but will need to raise it again next year or find new tenants.
And yes, 15% annualized return after 5 years or so.
- 1yJaycee GreenePro MemberReal Estate Consultant · St. Louis MSA · Member since 2024 · 3k+ posts · 727 votes
Quote from @Ethan Kohler:
Quote from @Jaycee Greene:
Quote from @Ethan Kohler:
Quote from @Jaycee Greene:
Quote from @Ethan Kohler:
Duplex purchased in 2024 - First deal, Turn key, traditional Side by side, 1980 build in good area (same suburb where I live)
Listed on MLS for $325k, accepted $300k on land contract with 20% down at 5.5% interest with 5 year balloon and 25 year am. Seller preferred land contract.
Initial rent totaled $2,360 and I raised this year to $2,660. Still a bit below market rent but tenants have been good/stable compared to what I have heard from other stories.
Taxes went up to $7,210 per year that I just paid. After taxes and a few other relatively small expenses, I am about $1,000 in the negative. Was it worth it....??
I'm sure the answer depends on perspective and long term goals. I preferred a better, value add deal, but those were tough to find and take on at my novice level. This seemed like a good deal in good area for first one under my belt, but it took capital and was something of a lateral play.
Feedback?? I thought interest rate was good, considering. But taxes took everything.
Hey @Ethan Kohler! What do you think you could sell it for now?
I'd say $320k. One is listed down the street for $380k, but it also has a garage for each unit, mine only has car port.
@Ethan Kohler, in my opinion, I wouldn't worry about your cash flow situation at this point, as long as it doesn't negatively affect your day to day life. Are you planning to raise rents in the next year or two? Have you projected out what your overall return would be after 5 or 10 years?
Yes, I just raised each tenant by $200, but will need to raise it again next year or find new tenants.
And yes, 15% annualized return after 5 years or so.
@Ethan Kohler That's great - sounds like you've got a great first property! Are you looking to acquire more?
- Member since 2025 · 2 posts · 1 vote11mo
Quote from @Jaycee Greene:
Quote from @Ethan Kohler:
Quote from @Jaycee Greene:
Quote from @Ethan Kohler:
Quote from @Jaycee Greene:
Quote from @Ethan Kohler:
Duplex purchased in 2024 - First deal, Turn key, traditional Side by side, 1980 build in good area (same suburb where I live)
Listed on MLS for $325k, accepted $300k on land contract with 20% down at 5.5% interest with 5 year balloon and 25 year am. Seller preferred land contract.
Initial rent totaled $2,360 and I raised this year to $2,660. Still a bit below market rent but tenants have been good/stable compared to what I have heard from other stories.
Taxes went up to $7,210 per year that I just paid. After taxes and a few other relatively small expenses, I am about $1,000 in the negative. Was it worth it....??
I'm sure the answer depends on perspective and long term goals. I preferred a better, value add deal, but those were tough to find and take on at my novice level. This seemed like a good deal in good area for first one under my belt, but it took capital and was something of a lateral play.
Feedback?? I thought interest rate was good, considering. But taxes took everything.
Hey @Ethan Kohler! What do you think you could sell it for now?
I'd say $320k. One is listed down the street for $380k, but it also has a garage for each unit, mine only has car port.
@Ethan Kohler, in my opinion, I wouldn't worry about your cash flow situation at this point, as long as it doesn't negatively affect your day to day life. Are you planning to raise rents in the next year or two? Have you projected out what your overall return would be after 5 or 10 years?
Yes, I just raised each tenant by $200, but will need to raise it again next year or find new tenants.
And yes, 15% annualized return after 5 years or so.
@Ethan Kohler That's great - sounds like you've got a great first property! Are you looking to acquire more?
Hi Jaycee, I'm very new to real estate investing and I am trying to acquire my first property right now. Can you expand on why you think this is a great first property? Is it because the value of the home will significantly appreciate in the near future and losing money in the short term is worth it?
Thanks,
Tyler
- 11moJaycee GreenePro MemberReal Estate Consultant · St. Louis MSA · Member since 2024 · 3k+ posts · 727 votes
Quote from @Tyler Freeman:
Quote from @Jaycee Greene:
Quote from @Ethan Kohler:
Quote from @Jaycee Greene:
Quote from @Ethan Kohler:
Quote from @Jaycee Greene:
Quote from @Ethan Kohler:
Duplex purchased in 2024 - First deal, Turn key, traditional Side by side, 1980 build in good area (same suburb where I live)
Listed on MLS for $325k, accepted $300k on land contract with 20% down at 5.5% interest with 5 year balloon and 25 year am. Seller preferred land contract.
Initial rent totaled $2,360 and I raised this year to $2,660. Still a bit below market rent but tenants have been good/stable compared to what I have heard from other stories.
Taxes went up to $7,210 per year that I just paid. After taxes and a few other relatively small expenses, I am about $1,000 in the negative. Was it worth it....??
I'm sure the answer depends on perspective and long term goals. I preferred a better, value add deal, but those were tough to find and take on at my novice level. This seemed like a good deal in good area for first one under my belt, but it took capital and was something of a lateral play.
Feedback?? I thought interest rate was good, considering. But taxes took everything.
Hey @Ethan Kohler! What do you think you could sell it for now?
I'd say $320k. One is listed down the street for $380k, but it also has a garage for each unit, mine only has car port.
@Ethan Kohler, in my opinion, I wouldn't worry about your cash flow situation at this point, as long as it doesn't negatively affect your day to day life. Are you planning to raise rents in the next year or two? Have you projected out what your overall return would be after 5 or 10 years?
Yes, I just raised each tenant by $200, but will need to raise it again next year or find new tenants.
And yes, 15% annualized return after 5 years or so.
@Ethan Kohler That's great - sounds like you've got a great first property! Are you looking to acquire more?
Hi Jaycee, I'm very new to real estate investing and I am trying to acquire my first property right now. Can you expand on why you think this is a great first property? Is it because the value of the home will significantly appreciate in the near future and losing money in the short term is worth it?
Thanks,
Tyler
@Tyler Freeman While he might be negative now, he says he can raise rents over the course of the next year or two, which seem to be enough to push him into positive cash flow territory. Also, he expects to generate a 15% IRR, which definitely beats much of what you can get from the market over the same period without taking on a high amount of risk.
- Member since 2024 · 21 posts · 10 votes11mo
The taxes on this seem insane to me for a duplex. But I'm also in Indiana.
- 11moAshish AcharyaBusiness MemberCPA, CFP®, PFS · FL · Member since 2017 · 5k+ posts · 3k+ votes
Honestly, for a first deal, this isn’t bad at all. From a tax side, that $1,000 loss isn’t really a loss once you factor in depreciation, that non-cash expense often turns negative cash flow into a paper loss, which can help offset other income depending on your situation.
You’ll also build equity through principal paydown and appreciation, and those property taxes are fully deductible. So even if it’s tight now, it’s still setting you up for solid long-term tax and wealth benefits. Happy to connect!
INVESTOR FRIENDLY CPA®5240 Reviews - 10moTravis TimmonsPro MemberRental Property Investor · Ellsworth, ME · Member since 2021 · 1k+ posts · 2k+ votes
That's a great deal. There is no more immediate gratification in real estate investing. You either have to do a really difficult or expensive project, take on a high effort strategy (STR, rent by the room, etc.), or buy a good asset and wait. And nobody really makes money for the first 1-3 years if they are honest about expenses. Nice work.
- New to Real Estate · Metro Detroit · Member since 2022 · 25 posts · 11 votes10mo
UPDATE:
Thanks All. I have also learned that the expenses are real. Dryer, breaker, flame sensor, another flame sensor, water heater repair, carpet repair, etc.
Either 3 hours and multiple home depot trips if your not an expert, or its $300-$500 per service visit/parts.
I finished the year ~$1500 in the red, but I feel I have equity and learning.
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