Our first deal: Lessons Learned + Shoutouts

[Andrew West]

Hi BP Community!

My wife @Leanna West and I just closed on our first investment property (photo below) and I are riding the high of finally seeing the fruits of our hard work and feeling like we’re living into the mindset of being “real estate investors”. I thought I’d share a quick recap of the process and some lessons we learned.

The Deal:

We purchased a fully-tenanted triplex in River Rouge, Michigan that was on-market on the MLS. We spent at least 6 months watching the MLS and analyzing various deals before finding this one and it really became second nature for us to look at a property and know if it was worth pursuing. The combination of purchase price, number of units, and some very visible updates to the interior are what initially caught our eye after scanning hundreds of "bad deals" over the months.

Here are the high-level numbers: Purchase price: $100,000. Monthly Rental Income: $1,875. Cash flow after all expenses: approx. $500

Key metrics: Price-to-rent ratio (1% rule): 1.88%. COC return: 18.5%, Cap rate: 13.42%

Financing: traditional investment property mortgage, 25% down, 3.625% interest rate, 30-year.

Our main lesson learned on this property was: “No” does not mean “No”. Just because you hit a roadblock in one aspect of your real estate journey, doesn’t mean your journey (or that one particular deal) ends there. CREATIVE SOLUTIONS EXIST. In our case, when our first lender hit a snag in underwriting and told us “no” they couldn’t fund the deal, we could have easily thrown up our hands and walked away. Instead, we posted about the situation on the BP forums, and in less than 24 hours we had found a solution and were back on track. I have to stress; this would not have been our mindset had we not heard the countless stories of success and creativity on the BP podcast.

As we all know, real estate is a team sport and this deal wouldn’t have been possible without our awesome network. By far, our biggest help has come from @Timothy Moore at Zest property management. Tim was one of the first folks we connected with on BP and he's a true REI Jedi in our market. Also, shoutouts are in order to @Christian Hall who’s been extremely gracious in connecting us to experts in the area. And finally, huge thanks to @Paul S. for responding to my forum post and recommending a lender who could make our deal happen. All of these connections have come through the BP community and I can stress enough how INCREDIBLE it is that we have such a networking machine right here at our finger tips. THANK YOU BIGGER POCKETS!

Last but not least, shoutout to our local REI community here in Utah: @Leif Oldert and @Johnny Hunt. In addition to having a solid team of "boots on the ground" it is my firm belief that all long-distance investors need a strong community wherever they call home to support them and be a sounding board for their strategies and ideas. It has been immensely valuable to build our business alongside others who are at very similar places in their real estate journeys!

What’s next? We are going to continue targeting multifamily in the SE Michigan area and are excited to continue strengthening the partnerships we have in place. We’ve got more capital lined up, but are always looking for ways to stretch our funding further, so if anyone has leads on creative financing or low money down deals, LET US KNOW! We’re in talks with a highly recommended commercial lender so that we can start targeting properties with over 4 units.

OWNARD!

Photo of the property: