Closing On My First Investment Property

in money •  8 months ago

I officially closed on my first investment property in Allentown PA in the last week which I am very happy about. With the income I earn of Steemit and from the housing income I am able to survive on a basic level, which is what I have always been aiming towards. It is a very bare bones survival, but I have the option and freedom to pursue other passions without having a stereotypical job. Unfortunately I will have to pay around 12k in health insurance next year so that will be a large drain on my income, but im hoping I can find some other way to make up for it.

Not my house pictured here by the way. (I WISH)

Onto the interesting part, the actual house I bought. It is a three unit building that is in the actual city part of Allentown and at one point was a singular large house with a carriage house in the back. The carriage house was converted into living space and the house itself was cut in half and two separate entrances were added over the years. The house is very old which I wouldnt recommend, but I fully expect to be putting 15%-20% of the rental income into just maintenance. The general rule is, the older the building, the more you will be paying to keeps things fixed.

I have insurance so really I only have to worry about smaller issues and everyday fixes. Big things will be fixed, albeit I will have to pay out of pocket a decent amount. The nice thing is you can write off the maintenance which means the amount of taxable income ends up being at a very low level. The downside is if you are paying too much of your profit, you arent making any money at all. I am paying a property manager to manage the property because I live two hours away, but I am still somewhat involved in the process. It might sound like a ton, but if you have a job and are looking to manage something on the side, it is totally doable.

So here are the numbers for my first house that some of you might find of interest.

The purchase price was roughly $325,000 and the rents are as follows.

Unit 1- $1000
Unit 2- $1400
Unit 3- $1000
Garage- Not currently rented, but potential of $200 a month

In total if I can get the garage rented in the next month, I am looking at $3600 in rent a month or $43,200 a year. The goal is after repairs maintenance and taxes, ect. I am hoping to net around $33,000 a year although until I figure out the learning curve I expect it to be most likely lower. That would put the property at a hypothetical 10% cap rate to begin with and the ability to raise rents over time. If the deal works out and there are not any massive problems that happen to the property, overall its a good buy.

This is my first time buying an investment property and there were some rules I broke just because of where I am actually buying the house. For example the age of the house which is very old, but on the east coast it is just what you end up getting. The location in Allentown has low taxes and the economy has been growing, so I am hoping for long term growth on the value of the property, but that will have to be seen. I will update every month with an expense sheet to show what had to be fixed and the cost so you can learn from my mistakes if you are looking to pursue something similar. I am also under contract for another building that will close at the end of August.

-Calaber24

Authors get paid when people like you upvote their post.
If you enjoyed what you read here, create your account today and start earning FREE STEEM!
Sort Order:  

As long as you get good tenants, it's a great investment. If it's not too late, I'd recommend putting in the rental agreement, that you (landlord) is allowed to visit the house once a month (including a walkthrough). You might not use that clause, but in the case of a destructive tenant, there's no legal hassles to inspect your investment once in a while.

I don't know what the rules are like in the US, but in Canada, if you get a tenant that destroys the place, it's still next to impossible to evict them.

·

Yeah the tenants seem to be good thus far. I actually chose Pennsylvania because of the low taxes and that its a landlord state generally. Evicting people is much easier than in other states, even some that border it. Im not too worried about them causing a ton of damage, just the usual. The nice thing about my property is it seems to be somewhat desirable for renters so the quality of tenant is a bit higher than in surrounding neighborhood homes.

This is a very interesting investment opportunity I'm happy that you are willing to take the risks and hopefully it will end up nicely for you. Keep it up. Can't wait for the next update on the newly added asset.

·

I hope it works out well too :). Theres been some maintenance stuff from the start but it looks like it should be fixed and ill put money into keeping the place up to snuff.

·
·

I truly believe that after a period of time the place should start to get fit and you know that if you take care of things on time they are cheaper and less likely to get complicated.

Congratulations! It's a huge step. I hope it goes well.

·

Thanks Try, I appreciate it!

I added you to good bloggers
https://www.goodbloggers.com/blogger/calaber24p
Site that will help people to find good bloggers. 7 months in development.
Help to survive this project. upvote or resteem or transfer some steem

Hey, congratulations, bro! That's awesome!

On a side note, hop on your PS4 when you get some time so we can jam on a game or something. Or, at least do a stream sometime soon so I can come act like a jackass in your chat :)

·

Hey dead! Thanks! I have been busy with this real estate stuff and havent felt motivated to stream or play PS4 but ill definitely hop on soon and let you know. How have you been?

·
·

Stressed the hell out, but I'm alright, lol. We're getting ready to move into an apartment within the next 2.5 weeks, so just trying to get everything packed and ready and have everything sorted. Moving sucks the most hairiest of donkey balls.

Yeah, we never got around to playing anything yet. Definitely hop on or stream sometime soon at least! If you've still got PS Plus they're giving away Dead by Daylight and a trivia game that's multiplayer, by the way. Would give us a few extra options of multiplayer stuff on there if you've got some time to play :)

I love reading this post. Thank you

Pretty exciting, congratulations @calaber24p!

Hello my dear @calaber24p, I invite you to visit my blog and supporting me. Saludos desde Venezuela. Thanks

I live near Allentown. The crime is terrible. I hope you know what your getting yourself into.

Congratulations @calaber24p! You have completed the following achievement on Steemit and have been rewarded with new badge(s) :

Award for the number of posts published

Click on the badge to view your Board of Honor.
If you no longer want to receive notifications, reply to this comment with the word STOP

To support your work, I also upvoted your post!

Do you like SteemitBoard's project? Then Vote for its witness and get one more award!

Wow! An impressive investment. I hope that it works out very well for you and that you are blessed in your endeavor!

Keep us updated. I want to try it when I can. Thanks for explaining the process. Seems easy enough.
Joy

beautiful and smart, gd luck

Cool. Someday I hope to do the same!