Purchased 1st Investment Property today at 9-Years-Old!

[Shiloh Lundahl]

Today my daughter Ashlyn closed on her first property at 9-years-old. Our attorney created a partnership agreement for our LLC with my daughter and I as partners (with me as managing partner - giving me the authority to sign all of the documents for the LLC).

I usually do most of my real estate deals with my partner Jason, but this one didn't have as much cash flow to fit our numbers with regards to monthly cash flow but it has good potential for capital gains on a lease option. So I am doing this deal with my daughter.

Here is a picture of the property.

This property was purchased from a wholesaler. The property was built in 2007 and needs minimal rehab.

Here are the numbers:

Purchase 137k (hard money lender 122k, private money lender 15k, our funds for closing about 2k)

Money costs for 3 months = 5k

Carrying costs for 3 months = 1k

Rehab 2k (painting and cleaning)

Total costs 147K

Current ARV 175k

Option fee of $3900

Sell for 189,900 (about 8.5 % higher than current ARV) on 5 year option.

Monthly rent $1325

Bank loan payment $900 (131k at 5.5% interest, 75% of ARV)

Private Money Investor $100 (10k after close of long-term bank loan. 1st private money of 15k is paid out at close of bank loan).

Taxes $93

Insurance $70

HOA $45

Assistant to help manage property $20 

Monthly Cash Flow = $97

If property sells at 5-year point, then the loan payoff will be round 110,500.

Projected capital gains to divide between Ashlyn and I at 5-year point will be $67,500. Cash flow will be around $6,000 over 5 years.

*These numbers are estimated numbers according to information that we currently have on the property and are most likely not going to play out exactly as planned but they are our projected numbers.