All Topics / Creative Investing / My First Deal

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  • Profile photo of jopiejopie
    Member
    @jopie
    Join Date: 2004
    Post Count: 15

    Hey everyone,

    some of you may remember my introductory post a few months ago in which i was trying to get a deal on 2 maisonettes (connected)… and it fell through..

    anyway, ive just got a contract on another one, not quite as good but i am happy with it for my first. i am only 20y/o (though i am feeling old) so i figure i have plenty of time to find better deals, and the first one will be a great learning experience;

    the vendor was asking $72,500 for this property. he has bee owner/occupier for a year or 2.

    at first i came in with an offer of $60,000 which was declined. a month or so later (as i hadnt found anything else thus far), i came back with an offer of $65,000 after doing my figures better (the previous offer was just to test the water really).

    after a little thought, i tried to come up with a few different scenarios that would work in our favour (both the vendor and i). so i crunched the numbers and was perfectly specific to arrive with a few different options. i made up a spreadsheet and was looking at what would provide the best cashflow and allow me to retain maximum capital. i was playing round with different deposit sizes/loans values and arrived at a few offers which i then presented to the vendor. these all included a condition of the signing of a 1 year lease by the vendor (as he wanted to stay on for a while and was offering to pay $110p/w which was below market rent). anyway, they went as follows;

    -$68,000 @ $130.00 p/week

    -$68,500 @ $135.00 p/week

    -$69,000 @ $140.00 p/week

    the minimum rent that we concluded would be viable on the open market was around the $130 mark, so the later were slightly higher, but reasonable.

    the vendor agreed on option 3 ($69,000 @ $140.00 p/week).

    so we currently have a contract and am awaiting finance to come through and i should have my first IP in the very near future!!! yes! [biggrin]

    i think that by making multiple offers, i had the vendor more interested in which offer to take rather than if he should or shouldnt take the offer…

    now its not much less than the asking price like i would have hoped, but im happy with it, as; if it didnt sell to me, it would have sold to someone else! the vendor was extremely set on $70,000 and after long negotiations i could sense he didnt want to budge… much..

    a great thing about this property is it has everything done already! (as opposed to the earlier deal) it is fully painted, has 2 airconditioners, polished floors, new water system, etc…
    and its on a big corner block!

    [biggrin]

    now maybe this isnt the most creative deal, but i am certainly happy with myself and just thought it would be good to share/discuss with like minded people on here!

    Cheers All.

    Jake

    Profile photo of emcdonaldemcdonald
    Member
    @emcdonald
    Join Date: 2004
    Post Count: 162

    Dear Jake,

    congratulations and best of luck with a hassle free settlement![cool3][biggrin]

    e x

    Profile photo of NobleoneNobleone
    Member
    @nobleone
    Join Date: 2004
    Post Count: 146

    HI Jake,

    Here’s a wot if…

    Wot if the tenant decides to move out just 2-months into the 12-month lease?

    You said market rent was $130pw… But you’ve done your figures on a guaranteed 12-months rent of $140pw.

    If you had to accept $130pw do your figues still stand up?

    Just playing devils advocate here.

    Cheers, Nobleone. [biggrin]

    “Making mistakes is just another another tool for learning.”

    Profile photo of jopiejopie
    Member
    @jopie
    Join Date: 2004
    Post Count: 15

    emcdonald: Thankyou! i hope everything goes well too. ill post up here when its all finalised.

    Nobleone:

    yeah at 130 p/w i would still easily cover costs.

    he will be there till the end of the year anyway because he has an employment contract so i doubt that he would want to move or buy another place… all his belongings are setup there and he wouldnt find a nicer place without paying a lot more in rent, so it seems like it will be safe to bet on the 140p/week coming in!

    cheers.

    Jake

    Profile photo of toni89toni89
    Member
    @toni89
    Join Date: 2004
    Post Count: 125

    Hi
    As long as your figures are done on the worse case scenario, then you should be fine
    [biggrin]

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