My first real estate investment

[Richie Thomas]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $277,000
Cash invested: approximately $70,000

4BR/2BA single-family long-term rental in Madison Alabama.

What made you interested in investing in this type of deal?

This was my first real estate deal. I became interested in real estate after listening to the BiggerPockets podcasts for several years.  After analyzing multiple markets, I zeroed in on Alabama in general because it has the 2nd-lowest real estate taxes in the country (after Hawaii), as well as its landlord-friendly eviction laws.  I became interested in Huntsville in particular because of its diverse employment base (Facebook data center, Toyota plant, Redstone Arsenal, and the multitude of aerospace/defense contractors).

How did you find this deal and how did you negotiate it?

Sourced via MLS. Found my realtor here on BP, she negotiated on my behalf. She is also my property manager, since I am an out-of-state investor.

How did you finance this deal?

Realtor introduced me to a local lender who ended up being the lowest interest rate (out of 10+ lenders I price-compared).

How did you add value to the deal?

I provided 25% of the total capital required, and 100% of the cash-to-close. In addition, I initially found the property via my MLS research and provided the due diligence necessary to determine the property's investment potential.

What was the outcome?

After minimal cosmetic rehab (about $4.5k in paint etc.), the PM was able to find a credit-worthy tenant with an excellent rental history, and signed a 12-month lease at $1,750/month.

Lessons learned? Challenges?

The monthly rent was a bit less than I had budgeted for. My lesson is that it's a bad idea to rely on your realtor to tell you if a certain monthly rent is realistic. It's like asking your barber if you need a haircut. Nevertheless, the deal does still cash-flow positively, largely because I made sure to include a margin of safety in my cash-flow projections.

[Mark Cruse]

@Peter McDonough I honestly dont feel it's constructive to tell a newbie what they did was terrible and will lose money. If you feel these things are true the appropriate stance would be to educate them on things they should consider for the next deal and add advice on how to mitigate potential problems that will occur now. Comments alluding to a 50k median income equates to a bad renter speaks volumes within itself. Competent realtor or not, no matter what it's hard to get a hard hitting SF deal on the MLS. My point in all this is the game is already very complicated and this individual took the courage to do what many will not/cannot. Yes, it appears there may be concerns here but it's not a forgone conclusion that its horrible and they will automatically lose money. Just takes strategy!