J P D
New Contributor
My first venture in real estate investing -update 12/26
Hi everyone,
I am currently negotiating the purchase of a 2 unit residential rental property and thought I would document my experience in real estate investing from the beginning so everyone could follow along. If anyone has any advice to offer along the way, please feel free. I joined here to take advantage of your guy's experience.
If you missed my introduction thread... I think it might be worth a look to see where I'm coming from and then watch me get where I want to be -
http://www.thefastlanetomillions.com/showthread.php?p=14930#post14930
So back to real estate. I don't think I need to go into my reasoning behind wanting to get involved in this realm of investing. I think the benefits are well known and the return possibilities proven. It makes more sense than not to invest in real estate.
I've spent the past few years educating myself on the subject as well as making sure to prepare so that every aspect of my life was in place to pursue this when the time was right. I needed to have my credit in line, save up an emergency fund, get a decent enough job that I would have no problem with a dp or covering the mtg in case of a vacancy. I followed through on all those preparations and now I am finally ready to move forward.
First thing I did was to find a good market. I wanted someplace nearby my family and job, but outside the city and cook co. Someplace that was easily accessible to and from other hot areas around the chicagoland. And most importantly, someplace that I would want to live. I started out with a list of about ten possible locations, then that list became five, then two, and then one. I had figured out where I wanted to start looking for property. This city has great population and industry growth, low crime, low property taxes, lake michigan water, and a recent hwy construction running near by. Now it was time to start researching this area further. I started reading up on the city and co. government, history and future of the city, all kinds of trends and statistics. Everything was looking good so I picked out a nice section of the city to focus on. This area is a desirable downtown/historic neighborhood close to cathedrals, college campuses, a casino, nightlife, lots of jobs both white and blue collar, and solid property appreciation. I drove to this city during the daytime to walk around, night time to walk around, weekdays and weekends, just to get a real feel for what life is like in this area.
Now that I had done my due diligence in finding a location, I contacted a RE agent that is also involved in RE investing and knowledgeable in this market and we started looking at properties of my choosing. I must have looked at about 25 properties, of which only 2 caught my attention as having potential. I put in an offer on the first property but I wasn't aggressive enough and someone else jumped on it. Actually I couldn't have got it for what it was worth numbers wise so I don't feel like I missed out. The property needs to work out numbers wise because I don't want to get myself into a pickle financially.
My basic requirements of my first rental property are as follows:
1. it has to be turn key, fully furnished and livable. I want this first step to be an easy and enjoyable one that will encourage me to further invest in RE. I don't want to spend my time and money to bring a place up to decent living conditions right off the bat. I can do without the unnecessary frustrations until I get my feet wet a little.
2. since most two units in the area are converted sfr, it has to have private entrances to both units and a separate entrance to the basement/laundry/storage accessible by both units.
3. has a driveway and garage(possibility for extra monthly income)
4. rents at 100% occupancy have to cover the whole mtg. this is tough but I found one with a little searching.
5. since all of the homes in this area are about a hundred years old, I want something that has been recently rehabbed/updated with a modern appeal, I want central air, new bath and kitchen, new siding/windows/etc... all things that will make my property stand out from the rest when shown and command rents at the top of the market.
I know I was asking a lot, but I found a property that fits all my criteria perfectly. the first floor unit is a 2bed 1bath, hrd wood floors throughout, two entrances, very spacious and bright, very clean and modern, currently on a 6mo lease by a very nice, clean couple. the second floor unit is a 1bed 1bath that also has an updated bath/kitchen with hardwood flooring, painted walls, etc.. perfect place for me to live. If I get the property for what I think I'm going to at 0% down, the rent from the 1st floor will cover about 65% of my monthly mtg payments. So I will be moving into my first property, building equity, and paying about half of what I would if I were renting a place from somebody else. When I move out and get another property, this one will cash flow about $150 a month while fully rented(if rents remain where they are now) Starting to make good sence!! This leaves me able to continue to save about 80%(before food and stuff) of my monthly income.
Right now I'm waiting to hear back on my second counter offer. I hope to know something by the end of the day. I will post back here often as I continue on. This was the easy part, now the hard stuff comes into play...managing the property, tenants, and legal aspects which are all things that I have lots of questions on. I must say though that the process has been pretty painless up to this point, even kind of fun. I'm sure as I get further into this it will all figure itself out.
take care,
j p d
Hi everyone,
I am currently negotiating the purchase of a 2 unit residential rental property and thought I would document my experience in real estate investing from the beginning so everyone could follow along. If anyone has any advice to offer along the way, please feel free. I joined here to take advantage of your guy's experience.
If you missed my introduction thread... I think it might be worth a look to see where I'm coming from and then watch me get where I want to be -
http://www.thefastlanetomillions.com/showthread.php?p=14930#post14930
So back to real estate. I don't think I need to go into my reasoning behind wanting to get involved in this realm of investing. I think the benefits are well known and the return possibilities proven. It makes more sense than not to invest in real estate.
I've spent the past few years educating myself on the subject as well as making sure to prepare so that every aspect of my life was in place to pursue this when the time was right. I needed to have my credit in line, save up an emergency fund, get a decent enough job that I would have no problem with a dp or covering the mtg in case of a vacancy. I followed through on all those preparations and now I am finally ready to move forward.
First thing I did was to find a good market. I wanted someplace nearby my family and job, but outside the city and cook co. Someplace that was easily accessible to and from other hot areas around the chicagoland. And most importantly, someplace that I would want to live. I started out with a list of about ten possible locations, then that list became five, then two, and then one. I had figured out where I wanted to start looking for property. This city has great population and industry growth, low crime, low property taxes, lake michigan water, and a recent hwy construction running near by. Now it was time to start researching this area further. I started reading up on the city and co. government, history and future of the city, all kinds of trends and statistics. Everything was looking good so I picked out a nice section of the city to focus on. This area is a desirable downtown/historic neighborhood close to cathedrals, college campuses, a casino, nightlife, lots of jobs both white and blue collar, and solid property appreciation. I drove to this city during the daytime to walk around, night time to walk around, weekdays and weekends, just to get a real feel for what life is like in this area.
Now that I had done my due diligence in finding a location, I contacted a RE agent that is also involved in RE investing and knowledgeable in this market and we started looking at properties of my choosing. I must have looked at about 25 properties, of which only 2 caught my attention as having potential. I put in an offer on the first property but I wasn't aggressive enough and someone else jumped on it. Actually I couldn't have got it for what it was worth numbers wise so I don't feel like I missed out. The property needs to work out numbers wise because I don't want to get myself into a pickle financially.
My basic requirements of my first rental property are as follows:
1. it has to be turn key, fully furnished and livable. I want this first step to be an easy and enjoyable one that will encourage me to further invest in RE. I don't want to spend my time and money to bring a place up to decent living conditions right off the bat. I can do without the unnecessary frustrations until I get my feet wet a little.
2. since most two units in the area are converted sfr, it has to have private entrances to both units and a separate entrance to the basement/laundry/storage accessible by both units.
3. has a driveway and garage(possibility for extra monthly income)
4. rents at 100% occupancy have to cover the whole mtg. this is tough but I found one with a little searching.
5. since all of the homes in this area are about a hundred years old, I want something that has been recently rehabbed/updated with a modern appeal, I want central air, new bath and kitchen, new siding/windows/etc... all things that will make my property stand out from the rest when shown and command rents at the top of the market.
I know I was asking a lot, but I found a property that fits all my criteria perfectly. the first floor unit is a 2bed 1bath, hrd wood floors throughout, two entrances, very spacious and bright, very clean and modern, currently on a 6mo lease by a very nice, clean couple. the second floor unit is a 1bed 1bath that also has an updated bath/kitchen with hardwood flooring, painted walls, etc.. perfect place for me to live. If I get the property for what I think I'm going to at 0% down, the rent from the 1st floor will cover about 65% of my monthly mtg payments. So I will be moving into my first property, building equity, and paying about half of what I would if I were renting a place from somebody else. When I move out and get another property, this one will cash flow about $150 a month while fully rented(if rents remain where they are now) Starting to make good sence!! This leaves me able to continue to save about 80%(before food and stuff) of my monthly income.
Right now I'm waiting to hear back on my second counter offer. I hope to know something by the end of the day. I will post back here often as I continue on. This was the easy part, now the hard stuff comes into play...managing the property, tenants, and legal aspects which are all things that I have lots of questions on. I must say though that the process has been pretty painless up to this point, even kind of fun. I'm sure as I get further into this it will all figure itself out.
take care,
j p d
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