Today I signed my final loan documents and paid my down payment and closing costs at my escrow company. I also did my final walk through and set up a savings and checking account for my first buy and hold. Closing is tomorrow. Sh*t just got real.
I only decided to start investing in real estate when I stumbled upon a little place for sale. It was half of a duplex fresh remodel for only $35k. Renting for $650 /mo. It promised a C on C return of 45%. I was unable to close the deal because of the low price and the type of property. I was only able to find one lender willing to give me a mortgage for so little. Unfortunately that lender was unwilling to give a loan out for half of a duplex. Had I known more about real estate investing I might have been able to find a lender but I was greener than a tube of paint.
After that I started reading every book I could find on real estate investing. I doubled my saving and checked the real estate websites daily. I only had to look at 3 more houses before I found a house that should provide more than 12% C on C return, my minimum goal that I set when I started. 3 bed 1 bath 1027 sqft for $100k. I originally calculated it at 15.3% but closing costs turned out to be higher than expected. If I can rent it at $980 or more I will get > 12% C on C. My realtor who also owns rentals in the area says I can get $1000.
My concern is that another investor just listed a house about the same size same number of bedrooms and one extra bath and they are only asking $800 mo and they are requiring 760 credit score. My realtor agrees the investor is crazy. Not only are they charging too much but they have an unreasonable expectation for the credit score. I dont even have a 760 credit score.
My plan is to list it at $950 if the tenant can supply their own fridge, $975 if not and charge them for the trash service on top of that which will be in my name. Other utilities will be their responsibility. I figure its better to make a little less to possibly shorten the vacancy time.
In about a year I should have enough to put 20% down on my next property and have a cushion for emergency repairs on my units. After the second property the time it takes to save up for the next property starts getting exponentially shorter. The goal is to generate $100k /yr of passive income in 10yrs.
