I Bought My First Rental Property

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I’d been wanting to become a real estate inventor ever since I figured out that was the way most self made people came to wealth. Looking around to get as much knowledge as possible led me to attend local real estate investor meeting, countless videos on the subject and talking to as many people in the field as possible. The things holding me back was money mindset and knowledge, and I made it a point to fix that.

My time working in start ups and Fortune 500 environments has taught me that I’m partially unemployable for positive and negative reasons. I’m very driven and opinionated and sometimes don’t know how to reign it in. Sometimes, those traits don’t come across well in a corporate setting and that’s led me to believe I’m going to end up having a hard time trying to climb the ladder and it’s already playing out. Being a first generation in the US with pretty much zero financial footing can come with a lot of pressure. That means I’ve put it on myself to build generational wealth, and I REALLY enjoy a challenge. In order to achieve my goals though, it became apparent that investing in real estate would be an avenue to get me there and I started digging deep into it.

The plan was set and I decided to follow other’s paths so I began researching. I went to real estate investor meetups, watched videos and read everything about the topic that wasn’t too dry. During this time, all the advice I got was “invest in educating yourself” and “pay your dues”, while what I really needed to know was either, save up money for a downpayment, or contact owners to see if they would be willing to go through the wholesaling process. Between the different wholesaling, flips and buy and hold strategies, only the latter made sense to me so I doubled down on trying to buy as many properties as possible and holding them forever. I’d already gone through the home buying process when I bought my first personal residence so I followed the same steps. I went to a local bank to get a pre-aproval letter against a $60k house in my area that they wanted 30-35% down payment for. That brought my world crashing down since I didn't have that kind of money readily available. That’s when I realized it was going to take me some time to actually make this dream happen. 

After about a year and a half of more learning, I found a real estate agent and connected with a mortgage broker to get an updated pre-approval letter. Increasing my income and saving up became the priority so I added part time jobs to my schedule and only paid minimums on debt. Everything started clicking and I landed on 3 criteria for a viable rental property. I needed to live in the property to take advantage of a lower down payment, it needed to have multiple units to maximize occupancy rate and it needed to cash flow. I started looking and of course the first property I walked with my agent was a single family house in the same neighborhood as the house I was living in. I have this fascination of owning multiple properties in one neighborhood so I figured why not. I sent the owner a low-ball offer that they luckily declined. Looking back, that would have been a bad deal so I’m glad because it kept me focused. My agent and I ended up walking about a dozen multifamily properties in that time. Offers were sent to some and others, I really just wanted to see in person. Months went by before my agent sent me a listing on a duplex, with 3 electric meters in a town over from me. I was foaming at the mouth so naturally, we booked the showing. Walking the property was eye opening as there were already tenants that committed to staying in the property, it was in a safe part of town and there was an attached unit the previous owner was using as a commercial kitchen. I had to have it. It was going to be be a turnkey since it already had tenants paying top of market rent for the area, and there was a possibility of turning the attachment into an income producing opportunity. 1 property with 3 units for my first deal had me excited. 

After finding the property, I started to finalize down payment requirements based off listing price. The bigger banks I talked to mentioned a 15% down loan program but I needed to go through some investor course since it would have been my first multifamily property. I ended up getting the same percent down requirement from my broker without needing to go through a course so I locked that in. The owners and I went through a few rounds of negotiations and landed on a final sales price. Now all I needed was to finalize the down-payment and closing cost funds because I didn’t have it yet.. I was driving Uber and Lyft, had my bounce house side hustle and my 9-5. I finally had plans to cash out an old 401k plans that wasn’t performing as well as taking out a loan against my current 401k plan. I needed about 2 months to save up and get all my paperwork in order so I added that timing to the contract that the sellers agreed to. After many long hours and missing pretty much all social events, closing date came and all papers signed.

The tenants have been good so far and I’m self managing this property due to some unforeseen issues with the local borough that I'm working through. Currently, I’m cash flowing which was the goal and hoping to save funds and get another 2-4 unit as soon as possible. The way I've been analyzed it, owning real estate is like having a savings account on steroids. Paying down the mortgage grows equity; I can cash flow and make passive-ish income, and should I sell and exit, there’s a potential to make a profit from appreciation.  It took me about 2 years to get a property from when I made real estate and priority, and after learning, I found a formula that works for me. Now, so I just have to wash, rinse and repeat as often as possible to grow the portfolio.