FDJake’s post about his first deal got me interested.
I’d like to hear about your very first real estate investment deal you made?
What did you invest?
Where’d you get the lead?
How did you do it?
What did you profit?
etc…
My first deal was blind luck. I saw an ad in a news paper for a duplex. When I contacted the guy he was a lawyer that actually had 2 duplexes both fully rented. He was making about $200/month each side, but the tenants were whipping his but. 3 of the 4y were not paying had him fixing everything and he was just wanting to get out of the deal. I bought both of them from him and when I financed them I paid down the note to make each unit yield $500/month. I then started enforcing the lease and in a year turned 3 of the 4 tenants and got people that would actually pay in there. It was really just blind luck but when I moved to Houston a year later, I sold them and made $50k off both of them. I probably could have gotten more for them, but had to sell quick. When I moved to Houston, I found a guy that woke up every morning and had to find something to do. He literally went to the mail box once a month for a living. I asked him how he did that. What he did was what I started doing and have been doing it every since. I found 3 bedroom, 2 bath 2 car garage house that have a after repair value around $100k that were for sale around $70k. I rehabbed them for less than $10k and rented them out for a $150 to $200/month cash flow. I did that for the first 6 and then I found a guy that had another way of ding it. I asked him how he did it and I did exactly what he was doing. I found 3 bedroom 2 bath 2 car garage house that had after repair value of from $100k to $150k for sale for around $70k to $90k needing less than $10k of rehab. I buy them fix them up in perfect condition, and rent them out using a trust to owner finance or lease to own them. I get $3k to $5k up front, I average $250/month cash flow each month and will get $20k to $50k when the tenant refinances at the end of the year. It is like a 12 month flip. I have been doing that every since.
My first deal…
27 years ago…
At the old age of 19 I opened up the newspaper and began looking through the classified section of the paper… Mainly just trying to waste time. There is was… An ad that struck my eye… R2 lot…
I thought, hummm… what’s an R2 lot? So I called the telephone number on the ad… The telephone number rang to a century 21 real estate office. A nice ladies voice answered, Century 21 may I assist you? I immediately said I am calling about the lot in the newspaper and she connected me to an agent.
He was a nice older guy, I imagine about the age I am now, I proceeded to ask about the R2 lot. Then not to sound to stupid… I asked how many units the lot can hold.
His answer “Two”
The price I asked…
12,000.00
I have no idea why I asked the next question…
Is there seller financing?
His response, “Come down, lets right it up and find out”.
So off I was to buying my first property.
Fast forward…
Being 19 didn’t give me the experience needed but hell I could do anything I wanted, or so I thought.
So here I am I have the foundation poured for a 1600 square foot 2/1 duplex… Boy am I proud of myself…
And guess who shows up at the site? Yep… The seller… He got out of his car and walked up to me asked “What the heck are you doing” My reply Building a duplex…
One itty bitty problem… Escrow hadn’t closed yet on the lot…
He said “Son I still own the lot until escrow closes” Own the lot still, I thought how is, I put down a deposit and made a long escrow so I could have the duplex built before it had to close.
He told me to contact my Agent which I immediately did.
Was he surprised to receive my call… Not because I was building before I had closed escrow but he had been trying to contact me for days he said… I ask why.
He politely said because your deposit checked bounced and escrow needs good funds…
I said good funds I thought a check for the deposit was okay and told him that I couldnt pay for the lot until I resell the duplex. He nicely educated me on ownership and possible liability.
And he went one step further and said he would see if the seller would go ahead and take a carry back. Which the seller did… As I think back I have no idea why he would but there are nice guys out there I guess.
So here I am building this duplex and now have it framed and the roof sheeting on… Keeping in mind I have never done this before. Here comes the rain…
Most of you wouldn’t think rain was a problem would you… Well when you don’t know to make sure the roof is water proof before you start sheet rocking it is… What a disaster that was… You would have thought my sheet rocker would have said something…
Fast Forward… the roof is on now and the duplex is in it finish stage; doors, trim, cabinets, and such. when this big Cadillac pulls up into the drive way…
Two very well dressed much older gentlemen get out and I recognize one of them… It was Walt from the supply company…
Hey Walt what brings you out here I asked… His reply… “Mike your bill is way past due and we need to find out when you can pay your bills”
Pay my bills I said… I said too Walt remember when I went into your company and sat in your office, which was the size of the duplex I was building, and asked to open an account and told you I could pay you when I was done? He said “Well” and then looked at the guy with him like I was some friggin idiot…
Then the next thing out of his mouth was 'Mike how much money do you need to finish the project and how much do you owe"
Being prepared for such a question I pulled the number 16,000.00 out of my ass…
Next thing he said was “Come by tomorrow morning and sign some paperwork and I will loan you the money to finish your project”.
I about fell over…
I went in the next day signed some paperwork and received a vouchers book, I had no idea what a voucher was, but I completed the process.
Once the unit was complete I took out a loan 80%LTV and was on my way…
I made a little but what I really did was one very important lesson I will never forget…
Just because you don’t know “how” shouldn’t stop you from doing, there are all kinds of people that will help you every step of the way…
Good luck
Michael
A blind squirrel found a whole oak tree…LOL.
that was an impressive story. although, don’t you think that could had ended up being a total disaster in many ways?
having said that, most people need that blind ferocity to get them started.
Michael, I think that is the funniest real estate story I’ve ever heard.
My first deal was because I bought a horse and needed a place to keep her. I bought 2.6 acres for $9,000 in 1970.
That land is worth about 6.5 million right now. Too bad I lost it in a divorce.
Buy and hold works really well in real estate if you buy the right property to hold and hold it long enough.
Goodness, Tatertot!
Where is that 2.6 acres at? Bordering next to the gulf of mexico or something?
Single family home. My business partner paid cash for it, I rehabbed it, we split the profit. I think I made $7,000 total.
Bought my first investment two years ago… a townhouse in a neighborhood where I visited friends. The townhouse next door had a bad fire and this one had very minor fire damage but plenty of water damage. Looked up the owners at town hall and sent them several letters over the course of several months. Finally got a call back. Paid about 60% ARV for the place in cash I had stashed. Put about $15K in repairs and 5 months of labor into it. I’ve now got about $90K equity in the place (at a “sell it this week price”, not a “list for 6 months before dropping the price, price”) and rent it for full market value.
Single family, bank owned property.
I actually went to the auction to see who was bidding (no one). The day the property hit the MLS - I went to see it and put in an offer.
Rehabbed the property, doing most of the work myself (except electrical and the roof).
Sold after 2 months on the market.
After repairs, all fees and holding costs came out with $14K.
Good post…
I took a house sub2 that needed good amount of repairs and was in foreclosure. I spent $3800 arrears, $1500 to the seller, $1,800 to the Attroney (he screwed me big time), $12k rehab, and 6 months holding costs.
If I remember correctly, they received one of series of letters I was mailing out and replied to it.
Easy… I hired a general contractor and told him to fix it 
actually, he ended up being not good. The job needed 5 weeks, he took 5 months on it which contributed to my lengthy and costly holding costs. And the job was not that great, I would not accept it today.
With all the mistakes, holding costs, and time, I ended up with $16k net profit
Stevio, Rancho Santa Fe, California, in San Diego County. It’s the second miost expensive zip code in America. (I don’t remember what the #1 place is)