First rental property purchase!

[Sokhna Wade]

Hello everyone,

For the past 6 months I have been educating my self about real estate investing. I’ve been doing a lot of research, listening to podcasts, reading books, and a lot of google.

I’m currently looking into buying my first rental property. I am very nervous and scared. The main thing after all the research I’ve been doing and educating myself I still feel like I don’t know anything. I am still reading books and always learning everyday.

My problem is I’m not very good at math and I know how important it is I’m real estate investing.

I wanted to get some advice from those of you out there who might have gone through what I am going through now.

What did you guys do? What steps did you take when buying your first property? What are some great resources?

I would love and appreciate as much advice as I can get.

Thank you all so much!

[Randall Alan]

@Sokhna Wade

Hello,

I'm a fellow investor in Lakeland, Fl.  We have 24 properties (40 doors) that we have purchased in the past 3 years.  My first recommendation is to shop until you find an under-market priced home.  Know that your best deal is the one that costs the least, but will rent for the most money.  Add to that, that you want one that has major items newer (roof, AC, etc).  We target $75.000-$100,000 homes that will rent for $1,000 or more per month.  

Our goal is to not have to put more than $3-5,000 into a property to be rent ready…if it doesn’t already have a renter in it…. This translates into maybe putting tile in place of worn out carpet, etc.

Other tips - have a wind mitigation and 4 point inspection done…. They will usually save you a ton of money on insurance.
look in places you wouldn’t think of… we have bought homes off Craigslist (seriously!). Off the county foreclosure market, off wholesalers, and our most recent purchase was from a divorcee that wanted out of her house because of the bad memories that was renting one of our rentals!?!  At the time we were starting, most nicer real estate was selling for $125-130/sf.  We were buying at closer to $75-80/sqft.  These were C class homes, in ok, but not great neighborhoods but by buying cheap, we netted about 50% of the rent as profit after all expenses, including a $100 maintenance reserve.  

3 years later we are selling some of our properties for 2-2.5 times what we paid for them!!!  We are using the proceeds of those sales to pay down other properties in our portfolio. The biggest key is to start… know if you wait the best deals will disappear. Don’t buy anything that doesn’t cash flow well.  For us, we started out with a $300/door minimum cash flow requirement on a financed property… that’s after principle, interest, taxes, insurance, and a maintenance reserve.  But we quickly realized even that was low if we shopped right.  We now routinely average $500+ per door per month… and sometimes much higher if we get a great deal! 

Be patient, buy right, and you will do well!

All the best!

Randy