Hello - I am from Metro Detroit and I've been introduced to Bigger Pockets last year in January. My wife overheard an random conversation between two strangers regarding Bigger Pockets and immediately proceeds to call me to tell me about this forum (two strangers had a lot of good things to say). I went to school to be an Electrical Engineer and recently got my Masters degree and currently work in Technical Sales. Although i receive a great salary, there is no freedom. There was always something deep inside me that told me "there is more this life but you will need the freedom to do it".
After listening to several Audible books by Brandon Turner, I decided i will give real estate a try! I made some calls to some friends of mine and asked if they knew anyone trying to off-load and sell properties. A few days later, someone called me saying they are selling an Duplex in an multi-cultural and up-and-coming part of town and was looking for a quick sale in order to fund a different investment. The upper unit was about 90% renovated and the bottom unit was 25% renovated with a tenant living in there. The asking price was $100,500 and the home had a new roof, new water heaters and newer furnaces. Homes in this area are selling for $130,000 to $150,000+ (depending on if its remodeled). Typical rent is $650 to $700 for non-remodeled units. A newer unit can command $850 if its fully updated and if there is a garage (mine had one).
There were some hiccups during the remodeling process and I had spent more than I was anticipating. Here is my cost breakdown...
Purchase Price: $100,500
Remodeling Costs: $25,000
Mortgage and Closing: $20,000
Top Unit: $850
Bottom Unit: $850
Monthly P&I + Insurance/Taxes: $885
Water Bill: $80/month
Prop. Management: $0 since i manage it myself but i plan to outsource it once i get a few more
Punching all these numbers in the BP Rental Calc., I am seeing a $617 monthly cash flow after all expenses (including 5% for CapEx, Vacancy, etc.) and an 16.5% cash on cash ROI. If i went with an Prop. Management Company, I would be seeing 13% ROI and roughly $480 in cash flow.
My plan going forward is to purchase my next investment using the BRRR method and hopefully use little to no money down to purchase it. If you have any questions, please feel free to ask! If anyone is in the Metro Detroit Area or would like to invest with me on future purchases, please don't hesitate to contact me.
