Well, I crossed over the threshold from being an owner occupant to being an actual investor. Due to this whole covid thing my job laid off 90% of the company. I happened to be one those lucky few who lost my job. As a result I was able to access my 401k that I had building for a few years. I only had about 25 grand in there. I put an ad out for someone who was willing to carry a note on a property and someone answered it. He had a house for sale in spokane valley washington. The place was in decent shape but he had also done alot of work to it, (fix and flip status) new floors, windows, carpet, paint, etc.
I worked out a deal with the seller. 230k purchase price 25k down with 5.5% carry for 8 years.
The income/expenses with this place were a little complicated Due to the floor plan of the building so I had to get a little creative.
Its a 4 bedroom house, but has a walk-out basement. The basement has 2 rooms,the laundry, a kitchen and bathroom. Also the house is metered as single family so dividing the utilities up is a pain. The laundry is at the base of the stairs which is in a weird spot because there is a room on the other side of it.( meaning the upstairs people would be in the downstairs tenants space).. There was a few things I considered as to how to make this deal work. I thought of making the "top" unit 3 bedrooms with one downstairs while also cutting off the other one bedroom unit to the laundry. I thought about moving the door to the laundry. I also thought about getting stackable washer/dryers... (2 of them and putting a wall in between them)...
Here is the solution I came up with: I gave the upstairs tenants (who used to be my roommates at my other house) the power to sublease. So they went and found a renter they deemed worthy and put him in and heres the results of this decision: 1. The tenants (my old roommates) were able to get someone in they trusted who they could share a space with comfortably. 2. They were able to save money relative to their old rent with me. 3. The downstairs tenant has his own space in a place he is comfortable. 4. I was able to solve for cashflow/electricity/WSG (because they are paying for all of those things, and splitting the electricity accordingly). 5. I was able to get quality tenants in who I know are good people who will take care of the property.
Money: My mortgage with escrow(taxes and insurance) is $1400. I rent the place for $1825 so I make about $400 or so on cashflow. I have no other expenses because I passed them on to the renters.
There are a few things I bought to make the house a little better. There was no dishwasher because of the weird layout of the kitchen. I had one put in. It was $500 plus $500 install (because the guy had to cut a hole in the cabinets and also relocate a power source). Also I bought two ranges for upstairs/downstairs. Which came to about $1000. The house had central heating but not AC. I had a professional AC installed into the venting system which was $3800.
So Im all in on this property for $28,649 (25k downpayment + closing fees), $1000 dishwasher, $3800 for AC, And $1000 for stoves.
TOTAL-$34500. I net $400 a month income.
I don't know, I think I did a pretty good job solving this. I also worked out this deal all by myself. I made the ad, negotiated the price and terms with the seller, and solved the cashflow issues. I did all this with no job and with mid range credit (credit didn't come into play on this). I also got the tenants in quickly (even before we closed the deal) and there was no vacancy. I also got other roommates in my other duplex (where I live) and had no loss of income there either.
The only thing I had when I did this was (a little bit of) money. But I gained alot of confidence. Now my next move I want to figure out how to get a property or multiple properties without having any cash saved up. How do I do that?
