What was your first investment property?

[Dr. Jordan E Smith]

Hey guys! 

Thanks to all the inspiring stories on this forum and the podcast, the hubs and I are taking massive action getting our finances in order to qualify for the best possible mortgage on our first rental property. Currently getting my RE license, so I can access MLS and begin analyzing more deals.

Already found an amazing agent and speaking with several lenders to find one who will lend on our desired terms: 3.5% down owner occupied on a multi-unit (tri or quad) in my local market. We're looking to build a long-term rental property portfolio. 

My question to you experienced investors is how did you get started? I'm curious about the following specifically:

1. Did you buy a SFR or a multi-unit for your first property?

2. What type of loan did you use? What was your downpayment?

3. What was your initial cash flow after all expenses? (not including tax benefits/equity/loan pay down) 

4. Did you have any land-lording experience or did you hire management right away? (will budget for it regardless, just curious)

Most importantly, would you do anything differently, looking back on your first deal? 

Thanks so much for your responses on any of the questions! 

Dr. Jordan 

[Nathan Gesner]

My first investment was a townhome. I knew nothing about rentals except that wealthy people had them so they must be worth the effort. 

My father-in-law was a REALTOR in a town I planned to move to and I had saved up about $10,000 so I asked him about rental property. He said he knew a property that would make a good investment and we bought it based on his recommendation without even seeing pictures. He told me the monthly payment would be $450 and it would rent for $650 so that sounded like a good deal to me. I didn't know about the 1% rule, the 50% rule, setting aside money for capex and expenses, or any of that jazz. 

The truth is, those rules didn't really matter. I bought the property with about $6,000 in down payment and closing costs. Rent rates went up, my mortgage went down, and I made a good return with the investment despite knowing nothing about investing. I set aside all the cash flow and built up a reserve. I paid for new flooring, paint, windows, and even a special assessment of $4,000 for roof and siding and everything - literally everything - was paid for from the money I set aside. In other words, once I bought it I didn't have to put another dime of my money into it. I sold the property ten years later and my initial $6,000 investment brought me a return of $65,000 cash in my pocket.

There were some hiccups along the way but it was a good experience and wet my appetite.