First Rental!

[Jay Patel]

Hello everyone,

After months of lurking the website and listening to some of the podcasts we finally pulled the trigger on a SFR last month! I wanted to give my thanks to the BP community, Brandon Turner, Josh and all of the guests on the several podcasts.

A little back story: I started my RE adventures with attending county foreclosure auctions last September. I started there because I had a friend doing it and some of the purchases he made sounded too good to be true. This was probably not a good idea for a newbie investor. After multiple unsuccessful bids (loosing to pro flippers) and 1 very close call with winning a house that had a bad title I retreated to the MLS.

Details on the deal:

REO - 1958 remodeled 2/1, 1030 SF (Decent Neighborhood, Close to 3 schools and on quiet dead end street)
Zip: 32726

List Price: $49,000 (Our initial offer was $46,500 but it went to highest & best)

Purchase Price + Closing (CASH purchase): $50,800 

(worried we should have stuck with the initial offer but we didn't want to risk loosing this one. There were other offers higher than ours which required financing. With this being an REO the seller (bank) went with our cash offer).

Improvement Costs: $2,100 (re screen porch, Landscaping (bad shape), painted entire inside, drained & filled 10' x 8' deep pond, Appliances) For a newbie, this house did not require much work which is not typical for houses in this price range in my area. In that sense I think we got lucky. The roof, water heater and AC are all mid life, it has updated windows, and the entire house is already tiled. 

Total Cost Basis: $52,900

The home just rented for $935/month. To be conservative during the analysis period we ran all the numbers assuming $700/month in rent so this worked out great. 

We just completed some minor work on the house and successfully found tenants & got a lease signed starting April 1st! I just hope we did a good job vetting the tenants, but I guess we will find out soon enough. 

What do you guys think of this deal?

On to the next one!