Success With First SFH Rental! But Please Don't Fish In My Hole!

[Clint S.]

Last summer I decided to take the plunge and buy my first single family home ("SFH") to rent, so my money could start working for me instead of me always working for my money.

I had discovered Bigger Pockets ("BP") earlier in the year and had listened to several podcasts about many different facets of real estate ("RE") investing and read countless posts in the forums of people who were experiencing success in their own RE investments across the nation.  So, basically, I knew everything there is to know about RE investing and was fired up to go get a piece of the action!

I pay my bills on time and have a great non-RE career, so I knew I'd have no problems getting a mortgage from a national bank for a small SFH. I also had plenty of savings to put 20% down on the property and make necessary minor repairs/improvements before placing the property on the rental market. I had no appetite or time for a major rehab project--I had (and have) enough unfinished home improvement projects at home!

Since this was my first foray into RE investing, I wanted to keep the purchase price around $100k and buy close to home.  I signed up for a paid membership on BP so I could take advantage of their awesome rental property calculator and started analyzing the snot out of any potential opportunity that met my criteria (viz., in decent shape within 20 miles of home and around $100k purchase price).  My realtor fed me information on the going rent rates for properties comparable to my target(s) so I'd have realistic expectations for what I could make in rent on each property I analyzed.

After considering many properties and making a couple lowball offers on a couple houses that were in worse shape than I would have preferred, I found a real beauty (3/1/1) listed for $110k within 20 miles of me that had recently been refreshed but not completely remodeled. The numbers checked out on BP's rental property calculator.  If I could pick up the property for $110k and get $1,400/mo. in rent as projected, I'd make approximately 20% cash-on-cash return on my investment!  It had just hit the market that day, so I called my realtor and got in the truck to go check it out.  

It was in Small Town, Texas, just outside the greater Houston area in a great rent market.  The home was in great shape for the price point, so I offered $105k knowing that the dollars worked even if I had to ultimately pay asking price.  I had gotten a pre-approval letter from my bank and submitted that with the offer.  Just a few hours later the Seller had accepted the offer!

Roughly 45 days (and a clean inspection and $110k bank appraisal) later, I closed on the property and the weekend after that took the entire family down there to get it cleaned up and ready to put on the market.  We spent an entire Saturday power washing, cleaning out the rain gutters, doing some touch up painting, swapping out plumbing fixtures, doing a little trim work, replacing light bulbs, trimming bushes, and doing general housekeeping and yard work.  By the end of the day, we had the place looking great!  It went on the market shortly thereafter and, within 11 days of closing, we had a signed 12-month contract at $1,350/month with a rock-solid tenant.

I quickly signed up with Cozy so the tenant could make monthly ACH rent payments online on auto pay for free.

Here we are seven months and seven rent payments later and I'm hooked!  After paying principal, interest, insurance and taxes, I'm clearing $615/mo. on my first deal.  

Hurricane Harvey stole the dryer when the garage took on several inches of water later that fall, but the house (built on pier and beam) stayed dry, and the washer somehow escaped unscathed.  I replaced the dryer with a $300 Amana special from Home Depot, since I didn't trust any of the 8,000 dryers on Craigslist in the Houston area after Harvey. Other than that, I've had no problems.

Now I want to try landing my first BRRRR (Buy, Rehab, Rent, Refinance, Repeat) opportunity. Infinity cash-on-cash returns sound too good to pass up!

If you're stalking BP forums, listening to RE podcasts and thinking about jumping in for the first time, I say "jump right in; the water's fine"!  Just please don't fish in my hole. :)

A big shout out to BP for giving me the tools, competence and confidence to do my first deal!