Closed on my first property Thursday!

[Daniel Miller]

I closed on my first property Thursday of last week. (I did start a thread in another discussion page about the tax deed process pertaining to this property, but this particular post is more appropriate for this section).

Super happy about this deal. I have been waiting two and a half years for this day. I have made many, many offers and they were all rejected or outbid. I stuck to my guns and it truly paid off. At the beginning of this process (and in tandem my Real Estate journey) I was 24 years old and knew nothing about Real Estate. I didn't know people could own large apartment buildings or small restaurants. I have thrown myself in and although I have a lot to learn I am soaking up every piece of information I can.

Two and a half years ago I started reading about Real Estate. Since that time; I have gained a property management client with a $9M portfolio that I personally manage (exclusively with the owner), we reduced annual expenses by $150,000, tapped into unrealized equity (rent increases and amenity upgrades) and added $115,000 in rental income to the income statement since December of 2011, I have joined a very successful commercial brokerage in my town, I purchased a renovation project (SFH) with two friends, I purchased two vacant pieces of land, I personally purchased my parents a storage facility (I have posted about this previously. I represented them in the purchase) AND FINALLY purchased my first income property. The purchase price was for $144,000 and I brought $141,000 to the table. The loan is basically being treated like an equity line at a rate of 7% annually.

The subject property is on a well-traveled and densely populated area. The parcel measures 12,200 square feet or a little over a quarter acre. It's a large corner on a road that sees 15,000 cars on a daily basis. (Renting this property, upon some cosmetic touch-ups, should be no problem. I love rental properties on highly traveled roads. You do not have to spend time advertising if you post a sign.) One building is a two-story, masonry bottom, frame top 4 unit apartment complex. There are three 1bds (two large) and 1 studio. The property also contains a two-car garage and a single family, wood frame, 1000 square foot home.

Breakdown:

Price $141,000

4 Apartments (2@650, 1@575, 1@500), 1 SFH (850)

Gross Rents - $38,700 - 8% Vacancy = $35,604

Expenses - RE Tax ($2800) Maint ($3000) Reserves ($1500) Utilites ($2400) Property Mgmt. @ 7% ($2492.8) LawnCare ($833.33) Misc. ($500)

TOTAL - $13,526.13 NET INCOME - $22,077.87

Cap Rate - 15.3%

I made an offer on this property in January of 2012. The offer never came of anything and the property got lost in either the bank or county's system. The tax deed sale sorted out the whole process.

I have learned a lot from everyone at BP! Thanks for the advice and guidance.