My First Deal and Future Plans

[Cameron Jarrett]

Hey guys,

I wanted to start out by saying this site is great and I love the twitter application for updates! I love listening to the podcasts while driving, works great!

I will start with a little back ground of myself....

My name is Cameron Jarrett and twenty-three years old. I just started a great job making about $50,000-70000 per year, depending on over time. I had been reading books for self-help and how to be successful. I keep ending up with real estate, which i continued to read more and more about. This is how I ended up here for the most part.

I started saving money to purchase my first rental property and found out my father's friend happens to own rental property near the biggest college in northeast Tennessee, East Tennessee State University. He offered for me to buy one of his properties, which happened to be a duplex. We sat down and figured a deal we both liked and proceeded with owner financing. It has been a couple months since the purchase and I wish I could have put more down and tried to lower the interest rate.

$95,000 was the purchase price with $3,000 down at 6% interest. Also, the area is about a mile from the college and not on the best side of town. I really do not expect the properties to appreciate a lot in my lifetime because they are near a salvation army and manna house. Its not a war zone by any means and I feel completely safe. I really hope the college grows as it is expected.

I want to proceed with saving money from my W2 job to purchase his other properties. I am only interested in two more at the moment. One is a duplex and the other is a fourplex. Both were rezoned from SFH to Multi-family. I have been studying the demographics, property values, rental comps in my area. I have been researching his other properties and really have a problem figuring the value. I have been discussing with him about proceeding with the other properties, and he says the best way to value rental property is to multiply the rental income per month by 90-180.

I told him I plan on working out a deal to make $150-200 from each unit per month, which I found here and is genius. I have never heard of this appraisal value. "Rental Income X 90-180." Has anyone came across this appraisal method? I feel like this method really enhances the value compared to a regular appraisal, which really makes it difficult to meet my goal. I thought this method was used for commercial. Correct me if I am wrong but I feel like for this investment to be worth my while, I need to get the a lower price and interest rate. I have a feeling a bank will not loan to a twenty-three year old with my income range and feel limited to owner financing with him.

This man is full of knowledge and has became a great mentor. he Has helped me through the entire process and still gives me advice for life in general. I am grateful for it.

I would really love feedback on how to approach him on the appraisal method and if investing in houses turned into Muti-family will be worth all the extra time, while not expecting to much appreciation.

Thanks in Advance,

Cameron