Taking The First Steps On A First Deal

[Cameron Delmotte]

Hello everyone,

First discussion here on BP.

I have been watching the podcasts and reading the forums and articles for a short time now, and am trying to get a solid understanding of this new world around me.

Recently deciding to get into real estate with a good friend from college, ( particularly investing, BRRRR, passive income for now) we've already been looking at and exploring options around us. With some early searching we have found a potential first deal and scheduled a walk-thru in 3 days for a quadplex.

Most people will say to learn more before stepping into a transaction so quick, but we learn best by actually doing it, and I see no sense in passing up a deal if it's there.

That being said, I'm looking for more direction on my scenario specifically. I would appreciate any feedback- comments,questions, advice, references, tips or pointers, etc... Thank you!

Some info about us:

- Early 20s

- Both have full time jobs in technical field, net  $50-75K a year

- Southeast MI area

- Most interested in multifamily / rentals, with positive ROI (:

Some details on the property: 

- "Quadplex" - 4 separate small homes on one tax id lot

- Found thru online listing sites (Zillow, Redfin...)

- Property details/descriptions on these sites are somewhat conflicting & incomplete, as is usually the case, hence the reason for an early walk-thru appointment

- Asking price $360,000

- Fairly nice area, near a lake; homes appear well maintained from pictures

- All homes with at least 1 bedroom potentially 2 (conflicting info) and 1 bath, basements (2 finished 2 not), and renovated in 2007

- 2 homes with month to month leases, 2 with leases expiring mid Nov. 2017

Financing:

- We have access to about $50,000 cash total for a down payment, immediate repairs, closing costs/process fees

- Homes currently rent out for a total of $3,560 a month

- Estimated monthly expenses (below)

Current Steps/Questions:

It is these first steps that kind of go under the radar when people talk about investing in real estate. We have ideas, but unsure which route is the best to take.

- Joint Ownership: we originally planned to establish an LLC, multimember... Is taking title jointly w/ operating agreement wiser? Other options? How would we go about these?

- Contacted a "buyers agent" found on BP to talk to rep us, scheduled appointment for early next week. He gave us a rec on a loan officer. What all does a quote on a loan include? Better to go thru banks, credit unions, or something else?

- Land contract unavailable. As noted above, not enough capital to afford 20% dp. This leaves us with having to owner-occupy with <20% dp, or are there other options ??

- Homesteading the property allows us the smaller down payment, as well as reduced taxes, possibly lesser rates? However the property is not real close to our jobs, and it robs us of a unit to rent out. Homestead is lost once we move out... Are there any other pros or cons?

This is all I can think of for now...

 Again, any help is greatly appreciated. In the meantime I will continue to research with my partner, just curious as to what thou fellow investors think!

Thanks for reading,

Cam