My first "real" investment on the books and rented!

[Amy Ranae]

Hey BP friends! I'm just writing to share my excitement. I closed on my first project house 10/19. I've been diy rehabbing it for the last six weeks and I'm excited to say I just sent off a lease to my first tenant! Here are my numbers. Purchase price: 113k 15% down conv: about 21k Seller paid my closing costs in lieu of paying me a commission Rehab: 15k Mortgage: 647 HOA: 300 Rent: 1575 (1550 + 25 for a pet) ARV: I'd say 160 but there are only 6 of this particular unit in this whole development and none have sold so no good comps, 145k on the low end. Since everything is brand new (literally everything!) I'm not expecting much by way of repairs for the first year. Tenant moves in 12/15. Please let me know if I did my cash on cash correct: 625 cash flow/mo x 12 = 7500 / 36k (my cash in) = almost a 21% return yes? I think I did pretty well for my first one! Hoping to refi in April. And the repeat of course:) BRRRR! Here's the plan. I want to buy more doors now and pay others to do the work. Since I'm a girl, ;), I wanted to diy the first one so I know how much things cost and how long they take but I'll def be hiring contractors going forward. I'm looking for apartments now. 4-20 units in the western and northwestern first and second ring suburbs of Minneapolis. I would like to seller finance if possible but I don't know enough about that yet. I'm doing a bit of driving for dollars, as well as mls and I'm on a list from a commercial broker. Any tips for my next one? I'd like to get it done in 2017! I think a building like I'm looking for will run anywhere from 200k-1M. I would also like to flip condos. We have a ton of outdated condos around here and they are small and would be a nice bit of quick cash:) Thank you!

[Jeff Bridges]

I'd start streamlining your analysis to make it consistent so you can apply to apartment units and across the board. It appears you missed items like vacancy, repairs, capex, management fee. Yes, some of these appear to be N/A since you self managed and repaired major items up front. You had ~2 months of vacancy in your first year as an FYI that need to be accounted in your cashflow since you didnt really earn income those two months but were incurring expenses. You'll want to prepare for at least a month of vacancy each year going forward. 8-10% vacancy rate is common. but a roof/hvac/water heater will still need to be replaced in x amount of years and you have the ability to determine remaining life left in all of these items and divide the replacement cost and divide by remaining years to establish these anticipated costs in your calculations. they are real will appear eventually... also in 10 years, you might not want to be managing 20 units yourself and if you account for them now with a management fee, you'll prove they still work management or no management. That gives you the flexibility you need to not have to sell them when you want to pass the management torch to a professional manager. 

real world numbers: I see about $347 in monthly cashflow after PM fee and 8% vacancy and about 11.% CoC. all I did was subtract 8% vacancy and subtract 10% management fee in expenses. That doesnt include the Capex and annual repair costs that will happen in year 2-10, so expect a bit lower once those are accounted. yes you can self manage the rest of your life, but is that you long term strategy and can you sustain that with adding 4-20 units on top? Just making the figures more realistic so you dont get caught by surprise.

Good luck!