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OKAY IT& #39;S HERE! As most of you know I closed on my first rental property yesterday, and now as promised I will be breaking down how I actually acquired this asset.
This is how I did it, I& #39;m sure there are other, possibly better ways to go about it, but this is how I did it.
This is how I did it, I& #39;m sure there are other, possibly better ways to go about it, but this is how I did it.
I can& #39;t think of an actual date, but sometime in 2016, I realized that real estate is a great way to build wealth. I was too young to actually own any RE in my name, so I attended local REIA meetings (real estate investors association) to learn as much as I could in the meantime.
Fast forward to 12:00 AM on November 16th, 2019 (my 18th birthday), I was on the computer starting to build my credit by applying for credit cards for my mortgage pre-approval. At this point, I started to actually viewing properties.
I was approved for a 3.5% down FHA loan with my parents as co-signers. I realize not everybody has this available. Don& #39;t let that stop you, there are plenty of other ways to get into RE. DM me!
The way my loan was set up I couldn& #39;t get into multi-family with co-signers, so I started looking into single-family. After analyzing 100s of deals, viewing around 7 properties, and putting in 4 offers I finally got one accepted. That& #39;s the house you saw in the photo above
Alright, yall are probably ready to hear about the numbers now, but you should know a bit about me, I& #39;m an 18-year-old business-owner/freelancer. Since 15 I have been selling photo prints and providing photography services in New Orleans. ( http://www.colefrechou.com"> http://www.colefrechou.com )
You definitely don& #39;t have to be self-employed to do this honestly, it& #39;s more difficult. The banks love a good w-9 job to pre-approve you.
Here& #39;s some info about the property
3 Bed 2 Bath - 1050sqft located in a New Orleans suburb
Purchase price of $115,000
Rehab ~$4000
Rent after rehab $1100-1200
3 Bed 2 Bath - 1050sqft located in a New Orleans suburb
Purchase price of $115,000
Rehab ~$4000
Rent after rehab $1100-1200
This cash-flow should only increase because of the location, rents tend to always increase across the board, and after I refinance I will get rid of my PMI insurance ($87/mo) I know, it sucks
I financed this using a 3.5% down FHA loan, now a lot of you may know that this is an owner-occupied loan. I intend on living there for 1 year, and afterward turning it into a traditional rental. During this year I will have roommates paying me rent that will cover my mortgage.
Ended up with a 2.875% interest rate for a 30-year mortgage. Getting my credit started early really helped with this. I can do a thread on credit later on.
My mortgage with principal, interest, taxes, and insurance is $655/mo, so that& #39;s $400-500 cashflow without reserves (monthly 5% vacancy, 10% repairs and 5% capex).
I should be cash-flowing right around $220/mo after my very conservative rent, rehab, and reserve numbers.
I should be cash-flowing right around $220/mo after my very conservative rent, rehab, and reserve numbers.
My thoughts are that cash-flow should only increase because of the location, rents seem to always increase across the board, and after I refinance I will get rid of my PMI insurance.
Cash-flow isn& #39;t the only thing sweet about this deal. I& #39;ll have some renters paying down my note thus increasing my equity, and I will also speculatively have some appreciation because the city it& #39;s in is BOOMING.
I realize there are much better deals out there, especially in the multi-family world, but this was a safe investment that will provide some steady cash-flow for the years to come. I& #39;m basically treating this as my retirement plan, haha.
So that& #39;s my first deal! What are yall& #39;s thoughts? It& #39;s not the best deal of all time, but it& #39;s not the worst. Hoping the deals get better and better especially with multi-family on the horizon. More on that another day.
If there& #39;s something yall would like me to dive deeper into, let me know, and ill try my best to answer any questions. I& #39;m just getting started and still have a lot to learn. Appreciate all the support!
Also! If any of you all found this helpful make sure to retweet and like it! I will be doing many more threads just like this one!
