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Updated over 8 years ago on . Most recent reply

User Stats

301
Posts
148
Votes
Tim Puffer
  • Lansing, MI
148
Votes |
301
Posts

First Deal - HERE WE GO!

Tim Puffer
  • Lansing, MI
Posted

Finally have my first investment property! First I wanted to thank a few people - @Joshua Dorkin for starting BP and making it awesome. @Brandon Turner for the great webinars and articles that you put out. Also, the best selling books! And @Ben Leybovich - For putting together his CFFU program(it's awesome) and for helping me out along the way.

I found the building by driving around my area and looking for pockets of 2-4 units. I targeted those that had some deferred maintenance - fading paint, long grass, etc. Then we had wrote letters and mailed them to the owners. This worked very well as I had 75% return contact on my small output of 22 letters.

Ok, now the details -

The building is near MSU here in Lansing - 5 minutes from the golf course. The units are each identical being 3 bedroom/1.5 bathroom, bi-level, 1,400 sq ft, with a one car built in garage. All utilities are separate.

Rents for units this size range from $900 - $1,200. I factored in getting $950 if I didn't update the unit. I have been in a building that is the same as mine in the neighborhood and not in as good of upkeep that is getting $950.

Purchase price - $119,500 - Comps in the area are $140,000 with a building the same size, but more updated under contract 2 buildings over from mine for $160,000.

Financing - FHA 3.5% down at 3.75% interest(seriously?! haha). I am house hacking.

Taxes - $4,200 - They are homesteaded right now

Insurance - $1,032 yearly

Total PITI is approximately $954 - There is $81 per month for PMI.

Garbage - $40 per month (this is more than it actually costs)

Other expenses - $100 - To account for PMI.

5% vacancy - $95

8% CapEx - $152

8% R&M - $152  

8% management - $152

Cash Flow - $240 per month.

My total cost to get the building was about $4,500. The seller paid $4,500 toward my closing costs and $1,000 for me to get a new hot water tank in the other unit!

It definitely wasn't easy, or fast to get to this point. There was a lot of learning, mistakes, and near tragedies (purchasing a building I should never have offered on!). 

Next for me is to update the other unit at the beginning of June. The tenants will be out May 31. 

I plan to continue this post with pictures and updates as I go along updating the other unit.

For any new person reading this - Get out there and learn and then TAKE ACTION! Don't be like most people and think about starting something and never do. Take a chance. Even if you fail. It will only be a step toward success.

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