First property purchased, FHA triplex!

[John Humphries]

Hello, BP! I closed on my first property yesterday, and it never would have happened without this site. To give you some background on myself, when I was 17 my grandfather passed away and left me a decent chunk of money. It was enough to buy my first car (a nice used Volvo), send me to college, and have money left over to put towards a house "someday." The catch is that it is all held in trust until I turn 25, and I have to ask to use any of it. Once I make a request, a committee has to review it to see if it aligns with the wishes and conditions my grandpa outligned in his will. The only other caveat is that the committee won't release more than 10% of the balance of the trust for anything (other than college) because they dont want "all the eggs in one basket." I knew that 10% of the trust wouldn't even cover all my closing costs, let alone a downpayment on anything, so I thought my only option was to twiddle my thumbs until I turned 25, get a conventional mortage and "someday" hopefully be able to start buying rentals. Rental property has been my end goal since I was about 10 years old. My dad had a few properties at that time and I was fascinated by the concept. I always thought it would happen much later in life. Then I stumbled upon biggerpockets last year and the glass was shattered, my brain lit on fire, and I realized "holy s#@!, I can do this right now!" I was working for a contractor at the time, and he was paying me cash off the books so I had zero verfiable income from a lender's perspective. I knew I couldn't get anywhere that way so I got a job delivering foreign car parts to auto shops in the area. They pay me extremely well, and I had about six hours per workday do listen to the BP Podcast. Win-win! After about six months on the job, lenders were finally willing to talk to me. I had a few false starts, but finally got approved for an FHA loan. I looked at every multifamily property on the market for months until finally this triplex popped up. It had two units rented, one vacant, and was listed at $100,000. The two rented units bring in $1,225 per month and the vacant one usually rented for $600, for a total gross rent of $1,825. Damn close to the 2% rule, right?? I viewed it the third day it was on the market and offered $80,000 two days later. After quite a bit of haggling, we settled on $90,000 with 5k of closing cost assistance from the seller. After the home inspection revealed a long list of repairs, we settled at $82,500 with $4,900 in closing assistance. The house appraised for $100,000 and the FHA only required a new porch light and to have some chipped paint repaired before going to closing. It all sounds so easy on paper, but there were so many hiccups along the way and there were a handful of times when I thought it was all going to fall through, but somehow we made it to the closing table yesterday. After all inspections, the appraisal, and my share of the closing costs, I got into this property for just over $5,000 of my own money, $3,000 of which came from the trust. My mortgage is only $590 per month including taxes and insurance, so even with only two units rented we are beating the 50% rule. I've run the numbers a couple thousand times, and I expect to have a net cashflow of a little over $500 per month when it is fully rented. For now, I'm just looking forward to house hacking for the first year and rehabbing my unit gradually over that time. It still doesn't seem real, but I'm picking up my very first rent checks today! Thanks to the entire BP community, without whom I may never have been able to buy my first property.