Hey All!
In this discussion I want to talk a little bit about my first success story as a real estate investor and how that has helped me to transition into where I am at today!
It all started out about a year ago. I had just turned 23 and had around $20k saved up that I really wanted to start investing with. The only problem was I had no idea how exactly I wanted to use it. And that is where Bigger Pockets came in! After some research on quick ways to learn real estate I came across this website and was completely intrigued. I started back at the first podcast, when @Brandon Turner and @Joshua Dorkin were just starting out, and began to listen to one after another after another sometimes 4 or 5 hours worth a day (on the weekends of course). After a few months of listening and getting somewhere into the hundreds of podcasts I decided that it was time to start a discussion on Bigger Pockets and really get the ball rolling.
Looking back now, I would say that my journey worked out fairly well, even though at times along the way it seemed difficult. Here's my story.
During October 2016, I decided finally that I was ready to make my first large step towards being a real estate investor, as listening to the podcasts and learning doesn't make you one. Nervous, I made an account on Bigger Pockets and clicked into the new member discussions and slowly typed out my situation and what I wanted to do as a real estate investor. As soon as I clicked send, my inbox and my discussion began to get responses. To my surprise people in my area of Roseville, CA began reaching out to me to offer their advice and support! It was at that moment that I thought, "finally, I am in it". I still carry that thought with me through today, I am so thankful that I am in it. It wasn't long until I was reached out by a local agent @Account Closed, who was happy to offer me some advice and pointers on getting started. I explained to her my plan that I wanted to do a primary residence mortgage at a low 5% down conventional through Frannie Mae, Freddie Mac, or a 3.5% down FHA loan. I wanted to purchase a multifamily distressed property and spend my time fixing it up while I lived in one of the units. After talking to her I knew my first step would be to get my preapproval and then to gauge what I can get myself into from there.
The preapproval process was a little longer than I had hoped for as I initially was having issues with getting that 5% down conventional based on what I currently made at my 9-5 job. After some shuffling of paperwork back and forth they came back that I was preapproved for just around 300k. With this preapproval in hand it was time to start hunting! Over the next week or two Sophia sent me over information on different properties and finally one made sense. The property was a small distressed duplex in the middle of downtown Roseville. Both units were 3 bedroom 1 baths at approximately 1000 square feet each, and the front unit had a basement that was also 1000 square feet. The list price on this property was $350k a few weeks prior but had fallen out of escrow and the seller lowered the price to 300k. With this in mind Sophia set up a date for me and my contractor @Brian Goodrich to look at it. While we were looking at the property a few people actually came by and walked in to see if they could join us at looking at the property. As soon as we finished and I got back home I told Sophia that I was sold and wanted to make an offer. Sophia recommended that we offer the list price of the property as the price drop had drawn a lot of attention and that is just what we did! It was at that moment that the next few months completely changed.
With the offer in all we had to do was wait to hear back! With fingers crossed and high hopes, we finally heard back with a counter offer for slightly above list. So we countered back for the seller to cover $5000 in additional closing costs and with that we had gone into contract. For the next month I provided all the documentation needed the moment it was asked and the house was finally purchased! First thing my contractor and I did was go into the front house and see what needed to be done to bring it back to life. After looking over the property we figured the best thing to do would be to gut both units and do complete remodels of everything. We started with the front unit and we were able to get it completely remodeled within a month and half of mostly working on the weekends. We then turned to the rear unit which needed double if not triple the work the front did. We replaced almost everything in the rear unit including opening up the walls to make the house appear larger. For the past 6 months this has been my main task over the weekends and has been a very tough and stressful but it has rewarded me ten fold!
Now that the process on the house is almost done I am looking at the next large step in my real estate investing career and I have a few paths that have opened up to me thanks to this first journey. Based on the comps in the area the new value on the property is in the low to mid $400k and I am in the property only about $325k. My plan from here is to take out a HELOC with my local credit union who is willing to go up to 90% CLTV at 4.25%, and with that money I will begin my next project.
Currently, one of my family members owns an investment SFR in San Jose, CA and they are renting it at about $2000 a month, however the market value of the property is $650k! With those numbers I have convinced them to let me use my funds and @Brian Goodrich 's expertise to rehab the property to then put it on the market. Once it sells we have agreed that they will pay me back and private lend the rest of the money over to me as long as I can pay them a return above what they were making in rent! With this new opportunity I have begun to explore purchasing either more multifamily properties or even purchasing an apartment complex here in California or out of the state in places like Dallas, Houston, Phoenix etc... At this point the sky is the limit and I am unbelievably thankful for Bigger Pockets in helping me along the way and to the community out there of people who just want to help and to see other succeed!
With all this in mind, if anyone wants to hear more about the project or if anyone wants to discuss anything further please don't hesitate to reach out to me!
(Also I will make another post with photos shortly once all the rehabs are done)
