james bowersParticipant@jamesbowersJoin Date: 2019Post Count: 1
Hello BP, I am just beginning my real estate journey and have been doing tons of reading and listening to BP podcasts, along with eagerly searching for my first investment property. I do not have much capital, about $10k and also have a credit score of 750-760. I do have some debt but nothing crazy. I have been paying it off like a mad man which is also part of why my capital is low at the moment. I am born and raised in the DMV (DC, Maryland, Virginia) particularly Northern VA, however I have been living in the San Francisco Bay Area for the past 4 years. I have support and a great investment minded agent back in DC who I have been bouncing all my ideas and potential properties off of for his opinion. Also I do know the area pretty well and have a good idea of the market and I travel back “home” once-twice a year. Anyway, I found what I believe is a great investment property in Washington DC, an area that is growing exponentially and will continue to grow in the coming years. Due to my capital being low I am looking for some ideas on how to creatively finance/fund this possible deal. This is a bankruptcy sale so I understand this will get bid up from the $200k start price, my prediction is as high as $350k-400k, I would hope for much lower, but I am mentally prepared for these price levels. This property is also located in the opportunity zones of DC, which offers tax incentives for investors. I am going to view it on June 20th to see how much work it may need. I am under the impression that some units may be considered uninhabitable so they may need substantial work. I have no experience estimating rehab costs, but I will take whatever I come up with and double it. Should I bring a contractor with me when I go to view it? Also, I am not familiar with bankruptcy sales, I will start to do some research on how they work but if anyone has any feedback on that it would be much appreciated.
All units in this 4 plex are 1b/1b and the average rents in the area are about $1100 a month for a 1b/1b according to rentometer, but lets say 1000 even. That brings the gross income to $4k a month. A lender I have been speaking with gave me numbers of if the property went for 250k and it was bought with 20% down, payments would be around 1400/month. Using the 50% rule $4k-$2k(monthly expenses, vacancy, CapEx, repairs, management, property taxes, etc) = $2k. $2k – $1400(P&I) = $600 cash flow, obviously that’s just a quick analysis, but I have put multiple different scenarios of numbers through BP rental calculators and the possible cash flow potential looks like it could even be better than that, it just depends on a lot of things as you already know, such as if I self managed, which I’m not against to start off, would save $200-$400 monthly. My thoughts are all over the place just looking for some insight because I am super anxious to get started, just looking for a great deal that I can actually afford and get into. I look forward to any constructive responses, good or bad.