3 months 2 properties 1 remodeling 2 leases 1 cashout refi

[Jay J.]

Last Saturday I signed the lease on the second property I bought in the past 3 months. It has been such a busy but rewarding journey so far.

A bit about myself: Working full time in New York City, Live in NY State Westchester County. Invest in Connecticut (anywhere south of New Haven)

From November last year I decided to start building wealth in Residential Real Estate, diversifying from my regular stock investments. I call myself a student of Warren Buffett (he doesn't know it), made close to 20% return in stock market through carefully read all financial statements of a target company and understand its fundamentals. Around Nov 2016, everything in stock market looked so expensive, even the troubled energy sectors enjoyed ridiculous rally without justification from fundamental. While my entry points were excellent, I decided to diversify at least 50% of my investable wealth into Real Estate. 

However, everyone knows NY City area including northern new jersey gets so pricy and naturally following a value investor's playbook, I spend time in New Haven/West Haven/Milford area. 

Lots of Bank Owned properties and many motivated sellers. If you have cash and send in an cash offer, you can quite easily got a good deal done. 

Got my first deal done through Auction.com - a single family house that just went through foreclosure. I bought it sight-unseen, and the day after closing, I found it had no kitchen. (yes, no kitchen). Previous owner hammed the cabinets and they took away all appliances: fridge, range, dishwasher ... you name it. 

Good news was, the bone of the house was good. Rest of the house looked quite decent (except no kitchen). 

So this first deal was a rehab and rent play (it was carefully underwritten and I am glad I left some buffer in my underwriting model)

Spend many weekend trips up there, and worked with a GC who is not bad, spend overall approximately $30K into the house. Signed the lease last Saturday. It is about a 6.75% cap deal after all initial CapEx (still not too bad in tri-state area but not the best deal) (All in $175K, did a cash-out refi valuing the property at $205K)

While I was working on first one, I came across another Condo in same area (5 mins apart). The deal was back to market on MLS because previous buyer did not perform (failure to get the Mortgage). by that time it has been on the market for well over 4 months, so the seller was a bit frustrated and quite motivated. I came in negotiated a 10% lower than asking price and rented the unit limited the week after closing. And this is a 8.5% cap deal.

Crazy 3 months to do this two transactions, 1 rehab, 2 leasing campaign, 1 cashout refi, 1 HELOC on primary residence. All by myself - one man show, while working in a 50-hour demanding full time job.

But it is so worth it when you put carefully screened tenants into the units (fingers crossed!), when you see rent checks appearing in TenantCloud account. It is addictive and I am onto the third/fourth/fifth deals now. 

A huge thanks for BiggerPockets community, especially the emotional support when I was literally dealing with too many things and my mind won't stop and my mood gets swinging and less controllable. (it happens).