First two deals under the belt!

[Gunnar Teltow]

I'm reluctant to post this under "Success Stories" since the jury is still out! However, it's a success story in that the BP community has motivated me to finally jump into real estate and make things happen. So thanks for that! Here goes:

Deal #1:

• 1 SFR 3/2 in North County St. Louis (I know, I know)
• $35k all in, will rent for $750
• bought all cash, hard to finance something like that

Deal #2:

• 25 SFRs in the same area, built around 1940-1950 (sample pic below)
• mostly 3/1, 900-1,200SF, expected rents around $550-700
• total cost $640k (about $26k per house)
• came with 80% note, 25yrs., 6%, $3,200 monthly payment
• monthly gross rents currently are about $14k, with 5 vacancies, so total potential monthly gross rent is about $16-17k

There are many on BP who warn against buying rentals in marginal areas (75% of my tenants are S8) but also some who think it's a good opportunity (see Lisa Phillips' excellent post on War Zones).

I used to live in St. Louis so I have people there I know and trust, plus a property manager who has experience and manages other properties in the area. I was initially looking for something to buy in Austin, but after touring a total slum property that barely yielded 1.4% I shifted to St. Louis since most people on BP counsel against buying negative cash flow for hopes of appreciation.

I'd love to hear your thoughts! Good, bad, ugly. Thank you!!