Updated about 11 years ago on . Most recent reply
First Deal for $5k!
Hello BP!
At the end of January, I closed on my first rental property for $5,000 total purchase price. The seller's husband had died recently and already moved into another house, so the property was a major headache and she just wanted to get out. She originally wanted $25,000, but after a few negotiation sessions, I was able to get her to accept $5,000 because I agreed to cover all of her closing costs and take care of the entire process, leaving her with $5,000 in her pocket and removing the burden from her life. I had read often about motivated sellers, but experiencing it firsthand was surreal. For first-time investors still looking for motivated sellers and high-equity deals, they're out there! Nevertheless, let's get to the numbers.
Purchase Price: $5,000
Rehab, Closing, Other Fees: $40,000
All in at $45,000 through a private lender
Total Out-of-Pocket: $1,714 for the Origination Fee and Insurance
$950 Monthly Rent with Tenant moving in within the next few days
Monthly Cashflow (after PITI, Vacancy, Maintenance, etc.): $450
All-In Amount after Paying off Private Lender and Refi's Closing Costs: $49,000
Cashout Refi Loan in 30 days through Private Bank: $56,000
Cashout from Refi back in my pocket: $7,000
ARV: $85,000
Equity Capture (after Cashout Refi): $29,000
Cash-on-Cash ROI: Infinite
For all the first-time investors out there, stay persistent and fight on because the deals will come! Tell as many people as you can that you're investing in real estate because that is simply how this deal fell in my lap. While I had to work minimally to acquire it, it truly just fell in my lap and I cannot be credited much for that portion. Keep going and they will come. Also, there are many details left out here but I just wanted to share the overall details to encourage you first-timers out there to see that it can definitely happen for you, if you want it to. Bring on Number 2!
Most Popular Reply
Congratulations, Jason!! Thanks for sharing! You give a newbie like me hope : )