All Forum Posts by: Derek Brunson

Thank you all for your responses, wisdom, and advice.  At this point, this property was just too much for us to tackle and we had to pass on it.  We are still learning and we will be getting our first property soon.  We are just beginning and we don't want to rush in and get ourselves into a bind.  We will continue to meet local investors, lenders, contractors, realtors, etc. and we will jump in when the time is right.  

Thanks again!

@Randall Weatherall I've talked to a couple of local lenders and to one that was not local and they all told me 25% down was all they could do.  I guess I'm just going to have to talk to some more!

@Peter McDonough My family is already in a different house and my kids are in a different school district. Also, even if we were willing to move, we couldn't sell or rent the house we are in for enough to make it worth it. Unfortunately, we didn't know to buy better when we bought our current house.

@Lucia Rushton I have seen similar properties in the same area and most need very little work to get them in great shape for renting. I would definetly firm up this number before making any final decisions and I have run the numbers with a few scenarios. The numbers I posted here are just a good guesstimate.

Thanks for your reply!

@Tomas Roberto Rodriguez Yes, we live in Lubbock and yes, we will be managing the property.

I guess I need to talk to some wholesalers. Do you have any you recommend?

@Rob Lee Unfortunately, friends and family are not an option for me and moving is not feasible at this time either.  

@Rob Lee That's part of my concern with this property. With no experience and no/little up front money, all I have to offer is the property and I'm not sure if that is enough to be valuable to a partner.

Hello all,

My wife and I have started saving for a down payment on our first rental property.  I talked with some local investors, real estate agents, and lenders so I could have a good idea of what I need to know about the local market and what to expect for our first investment.  We are looking for duplexes in Lubbock, Texas and we are looking at a specific area in town.  We know the duplexes in this area sell for $190k-220k and we need 25% down.  We have only recently started saving and don't have the $50k-60k+ for the down payment.  Today, I learned of an off market duplex that meets our criteria and would cash flow $500-600 per month.  This seems like a good deal to us.  The only problem is we don't have the down payment.  My questions are as follows:

Is this actually a good deal? 

3/3/2 per side, $200k asking price, $215k ARV, 25% down, 4.25% (lender says probably actually a little lower), $5500 make-ready (this is an estimate, I haven't seen the property yet but I am told it won't need much more than lipstick), $8K closing costs, $1200 rent per side, 8% vacancy, 5% each for repairs and CapX, 10% property management, Taxes/insurance $410/month, cash flow $600, all utilities are paid by tenants.

Is this a good enough deal that someone might be willing to put up the down payment in exchange for half of the cash flow?

Am I getting ahead of myself trying to do this before we have the down payment? 

Is this a marginal enough deal that I should wait for something better?

Do you have any advice on something I'm missing?

Thanks in advance for any help you can give!

Derek

@Dominic Canete Great job getting started young!  I am past 40 and just now getting started.  I wish I had my head on right when I was 17 the way you do.  I wish you huge success!

@Karen Sandvoss

That's very interesting, I would never have thought to hire dogs to protect the property.  I can just imagine someone trying to break into a rehab project and be met by vicious dogs.  Your post made my night!

Thanks for sharing!