Closed on our first deal!

[Max Householder]

Yesterday evening my wife and I closed on our first real estate investment property. I found Bigger Pockets about 3 years ago, so you could say it's been a long time getting to this point, although it's mostly due to analysis paralysis and failure to take action sooner on my part. That said, I am completely satisfied with where we are today, so I wouldn't change a thing. 

We bought a 4-family property in South City St. Louis, 63109 zip code that we found on the MLS. It's an 89-year old building (as most MFR in the city are), but is in great shape and has been very well cared for. The seller had owned it since 1949.

4 Units 1BR/1 bath each (these are true 1BR units, not walk-through or "shotgun" style)
3 units currently rented at $525, $525, and $550/month
1 vacant unit that's turnkey and we have listed for $550/month
There is a detached garage that should rent for at least $50/month.
Gross income = $2200/month, $26,400 annually. 
1% rule = 1.19

Sales price: $179,900
Seller put $3,000 toward closing costs and credited us $4,000 for a handful of minor repairs that came up during the inspection. 
30-year fixed rate mortgage at 4.25% with 25% down ($664/month)
2016 Taxes: $2,009
Insurance: $983/year
Total PITI: $913

Expenses
Water, Sewer, Trash: $218/month
Vacancy & Credit Loss: 5%
Property Management: 10%
Maintenance & Repairs: 15%

Total Expenses (w/out P&I): $1127 (52%)
$2200-1127 = $1073 - $664 (P&I) = $409 cash flow/month

Cash out of pocket (inspection, down payment, closing costs): $45,981
Estimated cash-on-cash return: 10.67%

This isn't a screaming deal by any means, but it's a solid base hit that gets us "in the game". Rents are going up quickly in our zip code so we see this as a stable property that will be cash flow positive on day one and has room to grow on the income side as we perform value-add over time. 

I can't thank our realtor Peter MacKercher enough for all his hard work showing me countless properties and then getting this deal over the finish line. I would highly recommend him for anyone looking to invest in St. Louis. His entire team was a pleasure to work with and even if you're still at the learning phase or not investing in St. Louis, he's a wealth of knowledge for anyone looking to get into REI and well worth reaching out to.

Of course a huge thanks to Josh and Brandon and everyone at BP and on the forums. Without this site we wouldn't have had the confidence to pursue REI and start down the path to financial freedom. Thank you!!