Bought First Cash Place for $125,000

[Cody Krecicki]

Its a condo/co-op that looks like a town house: big house split into two with a garage. They wanted $145,000 and we made a cash offer for $125,000 that was accepted. I'll do all the updates which should run $5,000 to $10,000 with high end appliances.

It's in Summerlin, Las Vegas in the 89128 zip code. The HOA is $190 and they take care of the roofs, exterior, landscaping and water. It's an upstairs unit with a spiral stair case off the back into a 20x20 back yard.

The plan is to get a HELOC on it. Get another deal for cash, fix it up and rent it out. And I'll keep doing that while paying the HELOCs down.

The goal here is to sell them a few years from now for $200,000 each and make sure to use the cash flows to pay down the principals. 

Well cash out 5 years from now with a million in cash, maybe more. Well take that money and buy an apartment complex with 60-100 units. Then live with that income the rest of our life's.

The current property we bought for $125000 can be rented for $1,300 with 4 bedrooms. The sq ft of the place is 1,400.

Any tips to help me accomplish my goal?

[Marcus Auerbach]

@Cody Krecicki yes here are a few things to think about: asking price and fair market value are not the same. Sellers (especially FSBO) tend to overestimate the value of their home because theyr know so much about it and the improvements they have made. The market does not always agree with those views. Get a CMA from your Realtor if you are not sure how to establish fair market value.

Second, I would not count on appreciation. We are starting to see buyer fatigue and I think the market is headed for a correction. We are somewhere late in the cycle of a sellers market, hard to tell if in phase 3 or 4, but things will start swinging the other side pretty soon.

Third, look for value ad opportunities. Where is a problem you can solve that increases FMV? Just buying appliances usually does not do the trick. Especially if you consider closing cost, agrent fees and holding cost.

Lastly, you are probably better of with a cash out refi instead of a HELOC. Talk to some local lenders, banks with less than 20 locations are normally much better than national lenders. Stay away from large retail banks and online lenders, it's a waste of your time.