Finally got my first deal done!!! It was a hell of an experience, but I wanted to receive my first rent check before I posted my success story.
Quick background on myself: I am 25, finance degree, work full-time, aspiring to be financially free, father owns a house building company in Houston, TX (moved out of Michigan after the housing crash)
I picked up this SFR property in Westland, MI. It's west of Detroit in the Metro-Detroit area. I bought the place for $76,500. 3 bedroom, 1 bathroom, about 1,000 square feet, 1.5 car garage. It was the least taken care of property on the street.
Updated the kitchen and bathroom. All new paint, installed vinyl plank flooring, updated electrical, new fixtures, misc small things.
I went the conventional mortgage route and put 20% down on the property. I spent about $20,000 in repairs and now have it rented out for $1,175 per month.
When I say it was a hell of an experience that is because I ran into a lot of issues along the way. Finding and house and purchasing was not the issue, but the rehab portion of it did not go as expected... It's a very long story, but I had issues with my first contractor and painter. I knew not to pay them a large portion up front so I luckily did not lose any money because of them.
Things I learned:
- Process of purchasing a house
- Process of rehabbing a house
- Rehab costs
- The tough process of firing people
- Additional items to look at when doing a walk through (dead tree that needed to be removed, gutter work)
Advice I can give:
- Don't be cheap. Sometimes saving as much money as you can, is not actually a good thing. My discount contractor and painter turned out to be a nightmare.
- It's OK to make mistakes! I am chalking up my overspending and mistakes to part of the learning process.
- Use your resources. My father used to build houses in Michigan. He gave me phone numbers of some guys to speak to, but I thought they were too expensive for what I was trying to do. Hindsight is always 20/20 lol..
- Talk to the neighbors!!! I learned that there was fire started by a mishap with a grow operation someone was running out of the garage lol. This lead me to understanding why the garage looked basically brand new.
- Dive in! I learned more in a couple of months after "diving in" than I did in the time I had spent researching and reading about how to invest in real estate.
This was a major learning experience for me, but after receiving that first rent check it was all worth it. Knowing that I will be mostly hands off (using a property management company) is an awesome feeling!! I am now reevaluating my investment strategy and am in search of another property to buy!
Before and after pics:
