All Forum Posts by: Josh LeMasters

Thanks Jonathan! I enjoy the area as well and Neosho is full of good people. In fact my wife grew up in Neosho, and still has family there.

I closed on my first investment property last month!  I've heard Brandon say on the podcast to always tell everyone around you that you are interested in investing in real estate, and I have taken that to heart. In this case an aging family member was looking to sell one of their properties after a tenant had moved out unexpectedly. We have had several conversations over the years about real estate, so when she was ready to sell the property I was the first one she asked.  

Here are the numbers:

Initial asking price: 48,000

-Little maintenance done on the house in the last 15 years, poor location, and low current rents helped me negotiate a lower price. This seemed like a win for both of us. 

Final Closing Price: 39,000

Financing: Seller financed with $2,000 down, 15 years, at 4%. (Being in the family was a major contributor to obtaining this solid financing, but I've heard of better financing outside the family.)

Rehab and repairs: Just under $3,000 so far. (repaint, refinished hardwood floors, minor plumbing, minor electrical, and lots of cleaning)

Total cash invested: $4,834.60

Rent: $625/mo + $25/mo per pet 

Thankfully we signed a 12 month lease about two weeks after closing on August 1st. We were able to get $625/mo plus $25/mo per pet. The tenants ended up having three cats and were willing to pay the extra money for each of them, so we settled at $700/mo! Hopefully the house survives the cats. They paid a $625 deposit +$250 pet deposit for the cats.

After operating expenses and the mortgage we should have cash flow of about $200/mo. 

Overall I wouldn't consider it a home run and I won't be able to quit my day job but I felt like the numbers were solid enough to make this a great learning experience for my first property. I had been looking to "pull the trigger" and get my first deal under my belt. It's nice to have moved from on the fence to in the game. The financing made this a great opportunity and I have learned a ton! 

Next I'm looking to purchase a live in multi-family in the Joplin, Missouri or North West Arkansas area. 

Hello everyone, I've been listening and learning from the podcast, forums, and website for the last year. Big thanks to Joshua Dorkin for establishing this amazing resource!  Bigger Pockets has helped me stay sane over the last 12 months while studying for the CPA Exam. Starting my investing career was the prize at the end of the tunnel. I passed my last exam in May, and purchased my first property in July. 

I have been an Internal Auditor for an international manufacturing corporation for the last two years.  Now that I have my first rental property and my CPA I'm interested in gaining experience by becoming a part of a team which specializes in syndication, turn key investments, or large scale real estate investment and management. My wife and I are open to moving for the right opportunity. 

I plan to make a second post in the deal forum to show the numbers on my first property: I'll link it here. It wasn't a home run by any means, but it's providing positive net net cash flow, and I'm learning a ton. 

My short term goal is to find a four, tri, or duplex in Joplin, MO or in Northwest Arkansas to live in. Eventually, I would like to manage my own investments full time. 

I'm looking forward to being a part of the community. 

- Josh

This is my first post on the forum. I've been listening to the podcast for the last several months, and snooping around the forums. REI is something I have been interested in for several years, but I have always hesitated to pull the trigger. I generally suffer from a big case of analysis paralysis in most areas of my life. A year and a half ago I pulled the trigger on going back to school for an accounting degree. I quickly landed a solid Corporate accounting gig, which has provided a steady income and a base for investing. I'm a couple months from finishing the CPA exam, and now seems like the right time to pull the trigger on investing.

I'm interested in buy and hold rentals and I originally thought our (my wife and I) first deal would be a live in duplex in our home town. However, a property with four duplexes ( for $399,000) popped up on my radar. The idea of not just starting my portfolio but kicking it into high gear was attractive to me.  I checked the local assessor's website and it turned out I knew the owner from high school. I found him on Facebook and we started talking about the property and my interest in investing. That gives you some of my back ground. Now on to the property details: 

Price: 399,000

Details: 4 Duplexes - 8 units with 2 bedroom, 1 bath 1 car garage ~900 sq/ft built in the 80's. All electric. Heated with electric base board heaters. AC is window units built in to the wall (probably my least favorite part about the units). Exterior is brick front with vinyl siding. The units are on a well and each building has it's own septic system. The units are a little out dated, but otherwise appear to be in decent shape. 

Location: The edge of the city limits of a town of 15,000 people three houses down from a junk yard and across the street from the municipal golf course. The town has a solid working class, but I'm not counting on the town growing particularly quickly, so I'm not counting on appreciation. The units are a 10 minute drive from my office. I would plan to manage, but I have a 6% management fee baked in to my analysis for conservatism. Not the best location, but could be worse. 

Numbers: 

The current owner has agreed to finance the down payment and what ever rate the bank settles on for 10 year fixed. The owner has discussed this with his current banker who has agreed to the financing deal. The seller told me he looks at it as a partnership. I created the following spreadsheet after reading Jay Scott's post about Multi-family deal analysis. I tried to be fairly conservative with my numbers:

https://docs.google.com/spreadsheets/d/1YJzV_LzfZN...

Price - $399,000

Downpayment 0

Improvements $5,000

Finance Amount  100%

Interest Rate  4.50%

Closing Costs (Including Setup LLC and draft promissory note) 2500

Upfront Investment - $7,500

Revenues                                                       Monthly            Year 1

Rental Income                             550             4,400                52,800

Vacancy Rate15%                                         (660.00)             (7,920.00)

Net Rental Income                                         3,740                  44,880

Other Income                                                                                  00

Gross Income                                               $3,740                 $44,880

Expenses

Property Taxes (annual)                                                              3,700

Insurance (annual) 1,036 per unit * 4 units                                  4,144

Property Management (% Rent)   6%                                         3,168

Maintenance & Repairs (Annual)                                                  4,000

Advertising (Annual)                                                                        300

Utilities (Annual)                                                                                00

Total Expenses                                                                         ($15,312)

NOI $29,568

Financing

1st Mortgage                                                                             $319,200

Term (years)                                                                                     30

Interest Rate                                                                                    4.50%

Payment (Monthly)            -$1,617.34                                        -$19,408.07

2nd Mortgage                                                                          79,800

Term (years)                                                                                     10

Interest Rate                                                                                  4.50%

Payment                                -$827.03                                       -$9,924.41

Cash Flow                                 $20                                                $236

Investment Basis                                                                         $7,500

ROI (cashflow/basis) 3.14%

Cap Rate (NOI/Property Price) 7.41%

My primary concern with the property at the list price is exit strategy. The property has been on the market for over 100 days now, and I'm concerned that I might have a hard time selling it after 5 or 10 years if I decided to upgrade.399,000 is the list price. Although I'm not putting money down I have about $10,000 in reserve cash, access to credit cards, and equity in my primary residence. My gut feeling is that this could be a deal for around $325,000, which with my current assumptions would put the cap rate at 9.1%, and about $5,600/year in cash flow.

So, what do you think about the numbers? What price range would you consider this deal workable? How much of a premium does 100% financing give a deal like this?