As Mike and Cassie get ready to move their tenants in this weekend, I can’t help but smile while I write this. I am so proud of them and what they accomplished buying their first investment property.
A couple of things you should know before I get into the details. This is March of 2017, inventory is at the lowest it’s been since 1999 when Realtors started keeping track.
Mike works in HVAC and Cassie is a Fitness Trainer. Neither had a ton of experience buying real estate but they do own their primary residence. Most importantly, during this time, both worked full time.
We met at the end of September 2016 in a Starbucks. They had just got married and were looking to buy their first investment using hard money. They wanted to start building a rental portfolio but didn’t to use all their cash on hand for a 20% down payment on a conventional loan. They had been working with another Realtor but was not having any luck.
We talked about the kind of tenants they wanted and where they wanted to look. After about an hour, we both had a better idea on how we could work together.
To make a long story a little shorter. I’ll jump right into it. Mike and Cassie toured 5 houses, wrote offers on 4 of them (all in multiple offers) and won the 4th one. Predicting an ARV of $215k and repairs at about $47k. They won the bid at $101,200. The scope of work included re-doing a kitchen, new siding, repairing windows, new flooring and paint throughout, plus the random sheetrock repairs.
From initial meeting to close, we clocked in just under 90 days. Mike was working on his new place before Christmas.
After about 15 weeks of rehab, they’re ready for their tenants to move in. Getting around $1,750 a month, Drew Hoefler from Renters Warehouse landed him a 2.5-year lease with students from Augsburg.
Mike and Cassie got more good news when their appraisal for their refinancing their loan came back higher than expected!
Here are the numbers (estimated):
- Purchase Price $101,200
- Rehab $50,000
- Potential Rent $1,750
- New Payment $1,250
That’s about $500 cash flow….
And $225 principal pay down per month.
Not a bad deal.
If you’re still reading, this is what we learned
- Still, there are deals to be had on MLS.
- Who you work with matters.
- Although we were not the highest offer, we were the best. Find out what matters to the sellers.
- A lot of work can be done before you see the home that will save you time.
I am super excited to do it again with them after their son is born!