First Investment Property

[Omar Holness]

Investment Info:

Townhouse buy & hold investment.

Purchase price: $255,000
Cash invested: $20,000

Townhome located in Salt Lake City that has generated an incredible amount of income.

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

As a pro athlete, locker room talk was always the second best thing to winnning games. Real Estate talk was always an important topic. As one of the youngest in the locker room, I would always listen to the more experienced guys speak about the value of real estate and how lucrative it can be. To then close on my first property after gathering all the information I needed felt incredible.

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

I found the deal through a local real estate agent after being rejected numerous times by banks. A private lender decided I was worth the risk and the rest is history.

How did you finance this deal?

I financed the down payment of my first property through income I saved in the year of listening keenly to locker room talk.

[Andrew Freed]

@Omar Holness - It sounds like you need to do a return on equity calculation. If you have, let's say, $150K equity locked up in this property and only cash flow 125 a month for a total of $1,500 annually, that is a 1% return on equity (1500 cash flow vs. 150K equity). Based on what you are saying, I'm assuming your return on equity is low. If that is the case, you should consider 1031ing that equity into something with a better return profile. For instance, if you can transition that $150K into a 6-plex multifamily that cash flows you 7%, you'd up your annually cash flow from $1,500 in the previous example to $10,500 by simply transfering the equity from one property to another. I believe Brandon Turner refers to it as the stacking strategy. In any event, I would seriously consider transition that equity into something that works harder for you in terms of the annual yield on your money.