Jumping in

[Michael Strobel]

Hi BP!

So Im a newbie. I dont hide it. But today.....I just closed on my first deal. Oh...and I got paid to buy the house. Yep I closed on the house and got paid a check (over $1500) to buy it. Its a duplex. Its in a quite neighbor hood, not too bad of schools yet close to stores/shops and restaurants. And the house is in good condition. Didn't have to put 20% down because I utilized the VA loan. Bought it for $146,500. Negotiated the seller to pay closing costs and 1/2 point to lower my interest rate to 3.25%. Total monthly mortgage is $820 w/ taxes and insurance. One unit is rented on a 2 year lease (only 4 months into the lease) And Im moving into the other. The unit that is rented is bringing in $650/mo. (probably $50-$100 below market rents). I am going to have a roommate live with me and pay me $300/mo.

So Im going to be bringing in $950/mo while Im living there. Covers my mortgage. Im doing 8.3% vacancy rate ($79) 5% for repairs ($48) and 5 % for Capex ($48). Total monthly expenses =$175. So I have to pay $45/mo to live there. So people might not have taken this deal. But Im a newbie. Ive read books, listen to podcasts and each of those things encourage to just do it but make a calculated risk. Thats what Im taking. See Im already on the lookout for my next property. My hope is I can find one by May. Move into that one. Charge $750 for the unit Im current and bump my income from $950 to $1400. Easily covering prop. mgt if I choose utilize it. The property will cash flow. Which is the only reason I bought this. See my first deal will nearly allow me to almost live for free. I have a good salaried job that will allow me to save more money over the next few months so that I can buy another property by May.

Getting started is scary as ^*$#@. This house was not the best "deal" as BP and other investment books encourage you to get. I pretty much paid market value. Might not have been the best thing but I had to jump in. When I realized the property cash flowed, at around $145/mo per unit (when both units are rented at market value) I just said screw it and jumped in. Im meeting with other investors in the area and learning how else to find great deals. But in the mean time, Im learning how to landlord and learning from others and building systems to make this into a business. This time will be very valuable as I start my REI career. This is just a step towards the goals where I want to be in 15-20 years from now.

My encouragement to those thinking about getting started....you just gotta jump. Yea...its scary. But to finally start chasing what Ive been dreaming about for over 7 years in my case.....theres nothing as exhilarating like pursuing your passions.