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My First Investment Property
Investment Info:
Small multi-family (2-4 units) buy & hold investment in Pontiac.
Purchase price: $22,000
Cash invested: $30,000
Duplex
How did you find this deal and how did you negotiate it?
This property was found on the MLS. I did't know anything about negotiating at that point, the property was listed for $30,000 and I offered $22,000. The seller was an older gentleman in his 80's that was looking to sell his portfolio of 20 properties and was listing 2 at a time. Come to find out he had a higher offer at $28,000 but he didn't like the guy so he turned it down. He happened to like us and took the $22,000 and never even counter offered. Lesson - Be kind to everyone!
How did you finance this deal?
Line of Credit
How did you add value to the deal?
Rehabbed the interior of the property, new kitchens, paint, light fixtures, and flooring.
What was the outcome?
When this property was purchased the first unit was renting for 595, which is now renting for 900. The second unit was renting for 605, and is now renting for 1200.
Lessons learned? Challenges?
This property is not a good neighborhood and during the rehab process the house next door burnt down. They did not have insurance so I had to fight with the city for 2 year to demo it. During that time I had no choice but to accept less than market value rent after rehabbing it. Once the house was on the demo list and taken down, I was finally able to charge market rent.
Sounds like you’re getting awesome returns on this property. Relationships are such a big part of this business. Would you buy in a rougher neighborhood again?
Newbie here searching for my first property. I am working with my real estate agent which has in been in communication with the seller's agent. So they are the ones mediating the deal negotiation.
I've heard many stories like yours how the seller likes you as a person and decided to take your lower offer. How did you get a hold of the owner to talk to the directly for making the offer? Was the owner representing himself?
Thanks!
Also congrats on the property! Sounds like great return numbers!
That's a great story and opportunity. I am new to real estate also. Learning on the fly but definitely inspired by the success stories. I am still wishy and washy on whether to be full time or not, but since being unemployed and going into self-employed, it's a bit of a learning curve. I did purchase 1 property on RoofStock, free and clear with rent at $775. Working to close on a duplex with rent on unit 1 at $825 and second at $795. Definitely, need to get the second to match up. Still new at this and figuring out the "How" side of real estate.
Replying to a few of the question posted.
Frank Geiger's Question
Would you buy in a rougher neighborhood again?
Yes, this is all I have invested in the past 6 years and have done rather well. Everything has not been perfect by any means, I have had to go through several evictions and had a lot of lessons learned. My main goal was to get free with cash flow and I was able to do that. With that being said appreciation on these properties are just not going to happen, my average house value is 60k and they are not going to really go above that. But I knew that from the start. My gross on these properties is over 100k now, and I don't regret starting where I started. I am looking to start scaling at this point a purchasing small apartment buildings in order to double my units in much shorter period of time.
Jeffrey Tang's Question
How did you get a hold of the owner to talk to the directly for making the offer? Was the owner representing himself?
The owner would only let the property be shown with him present, I did not try to contact the owner myself. He was not representing himself, he did have a realtor but didn't really want people talking to his tenants so he requested to be present as showings. We asked him a lot of questions when we where there because we didn't know anything.
Not sure if this was answered. I have sat through some of Brandon's webinar. The word keep coming up is "hassle". Now, I live in NJ. I use Roofstock to purchased my first property which was fairly easy and straight forward since I put cash to it. Just to get feet wet. Now I am looking to expand beyond Roofstock, does that traveling to the state to look at the property?? or is there a better way? Let's say I am interested on a property in OH (whatever) and I would like to bid on it. How would I do this without being on-site? This is little fuzzy for me but I am guessing I need to fly there. Although I do hear that property can be purchased and owner has never even seen the house. So I am puzzled. Any thoughts?
I looked at Roofstock closely for some time. I like the idea and I think it can definitely work. and there can be good deals. I'm still looking into it. However,
I just closed the first out of state property using a local realtor.
Here are what I learned.
1. At least the inventories I was interested in, in many cases, the Roofstock ledger showed problematic tenants - late payment and eviction process.
2. There are better locations and better deals outside Roofstock. Roofstock is very small compared to the overall listing.
3. Good mortgage broker and realtor can make it easier if you know where you want to invest.
4. I didn't personally visit the state I purchased the property. I will likely visit sometime later, definitely before buying another property.
I think the key is to put together a good team. The realtor I used did a really good job from finding a house, negotiating prices and closing. The mortgage broker was experienced in out of state purchase and closing. so everything went relatively smooth.
@Daniel Han Thanks. Sound like you completed the purchase and closing remotely. I appreciate the learned.