Newbies Unite! My first Property!

This is a blog directed at the amateur, newbie, paralyzed analyst or the skeptic.

High from the rush of just renting my first rental property I want to recognize the Bigger Pockets Community and all that it does for anyone willing to learn.

I want to start by saying that I am a Welder and Welding Inspector full time. Most of the time in a different province, working as much as 84 hours per week. 

Lack of time should have been a factor but I did not let it become one.

After making $200,000+ in consecutive years I thought I was doing well. I had the boat, house, Harley, snowmobiles etc. despite netting only $110000 of my gross. I knew there had to be a better way. All of the signs pointed to Real Estate so the journey began. I needed to pay less tax, build my net worth and reek all of the tax benefits in one avenue.

I took two months of income and bought 5 rented Mini Lots that brought in just $700 per month gross. This is very easy due to lack of responsibilities. In laymen terms I am a renter of dirt but a quick analysis determines there are better terms out there!

I joined bigger pockets as a resource to find how they were found.

I downloaded 10 podcasts per day and listened to them on my phone throughout my 12 hour night-shifts. Of course, Brandon Turners Audiobook was thrown in every second night as well. 

The reoccurring theme is buy and hold. All those who own success control their assets.

I got the real estate agent, the lawyer, the broker, the contractor and the inspector and began my hunt. A master mind group in the words of Napoleon Hill if you will.

Six or Seven homes deep I came upon a Widow selling an immaculate home for $35,500. It had all new siding, windows, roof and floors. My real estate agent and I entered the home. She is a no bullshit type of person and did not let me contemplate the scenario. I was terrified but made an offer at full list price using the Bigger Pockets Rental calculator and the real estate agent's encouragement that it would rent for $850 per month. 

The gamble and education all paid off. 

I will demonstrate the break down below:

Purchase Price Including New Heat Pump: 39000$ (Monthly Mortgage of $178 on 25 years)

Insurance for Non Owner Occupied Dwelling: 563$ ( $47 Monthly)

Property Taxes: 388$ ($32 Monthly)

Closing Costs: $1500 one time fee ($125 Month for the first year)

Total Monthly Expenses : $382

Rental Income on this property is 875$ per month. Resulting in a whopping cash flow of 493$ per month. BUT because all you other bigger pockets educated will tell me my math is incorrect I set aside 20% per month for Capital Expenditures, Vacancy and R&M. If there is money remaining at year end within this 20% it will be deployed against the mortgage principle.

Morale of the story = $394.40 in positive cash flow.