First Investment in "My Own Back Yard"

[Josh LeMasters]

I closed on my first investment property last month!  I've heard Brandon say on the podcast to always tell everyone around you that you are interested in investing in real estate, and I have taken that to heart. In this case an aging family member was looking to sell one of their properties after a tenant had moved out unexpectedly. We have had several conversations over the years about real estate, so when she was ready to sell the property I was the first one she asked.  

Here are the numbers:

Initial asking price: 48,000

-Little maintenance done on the house in the last 15 years, poor location, and low current rents helped me negotiate a lower price. This seemed like a win for both of us. 

Final Closing Price: 39,000

Financing: Seller financed with $2,000 down, 15 years, at 4%. (Being in the family was a major contributor to obtaining this solid financing, but I've heard of better financing outside the family.)

Rehab and repairs: Just under $3,000 so far. (repaint, refinished hardwood floors, minor plumbing, minor electrical, and lots of cleaning)

Total cash invested: $4,834.60

Rent: $625/mo + $25/mo per pet 

Thankfully we signed a 12 month lease about two weeks after closing on August 1st. We were able to get $625/mo plus $25/mo per pet. The tenants ended up having three cats and were willing to pay the extra money for each of them, so we settled at $700/mo! Hopefully the house survives the cats. They paid a $625 deposit +$250 pet deposit for the cats.

After operating expenses and the mortgage we should have cash flow of about $200/mo. 

Overall I wouldn't consider it a home run and I won't be able to quit my day job but I felt like the numbers were solid enough to make this a great learning experience for my first property. I had been looking to "pull the trigger" and get my first deal under my belt. It's nice to have moved from on the fence to in the game. The financing made this a great opportunity and I have learned a ton! 

Next I'm looking to purchase a live in multi-family in the Joplin, Missouri or North West Arkansas area.