My First Buy and Hold Deal!

[Jordan Rajchel]

After about 6 months of listening to Bigger Pockets podcast and reading just about everything I can get my hands on, I finally got my first deal done!

Property: 3 Bed 2 Bath 1300 Sqft SFH

ARV: $120,000 (conservatively)

Purchase Price: $82,000

Needed Repairs: $5,000 Max. Really doesn't need anything other than a good cleaning and maybe some wall repair/paint.

Financing: $73,000 financed on a home equity line of credit through my personal residence and 9k from savings. Plan to refinance sometime soon into it's own loan, get cash back out and go do it again (BRRRR)

Expected Rent: $1100 per month. While it is not rented yet, it seems that it should be fairly easy to get this rate based on my market.

I found this deal on a Facebook ad of all places. I decided to text the seller asking some basic questions, not really expecting it to go anywhere. When he said he was asking $90,000 and it was comping for 120 or so, I started to back out, assuming that it would need at least 20-25k in work and after all other costs, it wouldn't profit much at all. When I told the seller this, he insisted that it didn't need any major work. His in-laws bought the property 6 years ago and did a COMPLETE rehab of the property. All Plumbing, Electrical, Mechanicals, and roof were completely redone/replaced at that point. So he caught my attention and I went and looked at it. Well.. he was right. It really did not need anything at all and is actually a very appealing home in a nice little area close to downtown. 

The owner's reason for selling was that his work was taking him out of town and needed to sell fast. So I asked him if the 90 was flexible if I was able to close in 2 weeks or less. He said "HELL YEAH" so my interest was peaked further. The next day I offered him 82k, he accepted. Inspections went perfectly and less than 2 weeks later we closed. 

Biggest thing this deal taught / reinforced with me was that money is not the motivating factor for all parties. While it seemed crazy to me that this guy was willing to sacrifice 30k (at least) in equity just for a quick deal, he was absolutely elated to have someone that could come in, take control of the deal (since he has never done it before), and get him out from under this house. He was still able to clear over $20,000 from the deal and we were both happy!

If I am able to get the 1100 per month that i expect then I am clearing the 1% rule by a good amount (1.34%) and I instantly have at least 30k in equity and expecting to cashflow between 2 and 300 per month. 

Thanks BP for all the great advice!