Post #16 - My First Two Deals Ever!! Just Before 2018.

The Key

I'll tell you up front that I have a lot to learn. I have learned all I know from my old boss @Ian Reeves (BP Show 237). He has been active in real estate (while working a full-time engineering job) for about 18 months now. He was a great mentor while we worked together in the corporate world and he is generously guiding me through real estate investing.  Real estate investing is such a big world and there are droves of people who know way more than I do. But I can tell you what I have done lately and what I plan to do in the next 3 months.

Deal #1 - BRRRR

It's been coined the BRRRR strategy. Stands for Buy, Rehab, Rent Refinance, Repeat.

I bought the house for $65k.

After Repair Value (ARV) is estimated to be $105k.

Repair estimate is $15k.

Market Rent for the area is $1000/month.

I'll be all in for $85k ($65k+$15k+$5k {for closing costs}).

Refinance after rehab is complete and house is rented. Bank will lend 80% of value ($105k) = $84k.

I've just bought a house for $1000 ($85k - $84k) and it rents for $1000/month.

That's how it's supposed to work. I'll keep you posted.

Deal #2 - Assignment

I buy house for $40k with "Right to Assign the Contract".

House is worth $60k+ As-Is.

I find a buyer that will pay $43k for the contract. They buy my contract with the seller for $5k and virtually take my place as buyer of the property.

Seller gets $40k and gets rid of their house.

I get $3k for my work of finding the deal and I never see the property.

Buyer gets house for $43k without having to find the deal.

It sounds easy but there's a lot more to it.

Things I've Learned

After doing the first deal, I felt 100% more confident that I could actually make the real estate thing work. Every member of my family (and my wife's family) believes the only way you make money and take care of your family is to study hard, get a good job, show up every day and grind 9-5, and put money away in savings or 401k. Then you can enjoy your savings when you retire in 30 years.

My wife and I have been pretty low key about investing in real estate since May 2016 when I started reading about it (and Ian started blowing up my phone about his new found passion). Now, after buying two houses, we know we can make it happen and that real estate investing works.

Another thing I've learned is there really are deals out there. I used to think everyone paid and sold for full-retail price.  Efficient Market Hypothesis, right? Homeowners sell for all types of reasons all the time. From my first two deals, one seller was retiring and had just evicted a non-paying tenant and the other seller was from out-of-state and wanted to liquidate the house that he hadn't seen for 6 years.

The next three months

I'm being a little vulnerable here.  I plan to send out a mailing every month to five zipcodes as opposed to one zipcode previously. In order to achieve my 2018 yearly goals, that's how many mail pieces I need to deploy to make my deal funnel work. For the majority of the deals, I'll be wholesaling or assigning them to other investors. I'll select a few to hold in my own portfolio.  And that's the plan for Q1 2018.  Ready. Set. Go!