Are you interested in buying your first rental property? When I first started buying real estate, I had no idea what I was doing. But, I persevered, failed forward, and made $140,000 in my first 9 months! While I have definitely made a lot of mistakes along the way, I have also learned SO much about what to do right.
If you are in the process of buying your first rental property, then this post is for you. Don’t make the same mistakes I made, but instead have a plan and make some BANK!
Buying Your First Rental Property? Here’s How I Got Mine for $10!
Maybe you are new around here and don’t really know my story. Basically, I HATED working in my daily 9-to-5 and looked for the exit darn near every hour of the day. I wanted FREEDOM, and I wanted it yesterday!
My job was in our family business, so I worked for my mom who is an incredible entrepreneur. At the time, I noticed that she kept having these random checks coming to her in the mail, and I wanted to know more about her “mailbox money.”
She explained to me that she had some rental properties that she bought years ago, and they were still bringing in money every single month. Now, I knew what I made every month, and I saw what she was depositing.
I NEEDED to get some mailbox money of my own.
Fast forward a few
trainwrecks months later, and I had purchased a piece of land to do nothing with and then purchased another which I began to rent out for monthly cash. Things were coming together. But, I was BROKE. I was trying to do all of these things with the typical financing processes and it was killing my cash.
Then, I was invited to a local REIA meeting where I learned about the magic of creative financing, and my mind exploded.
Suddenly I knew that there were more options than I was using, and I could do this a whole new way.
Enter lease options and owner financing, my bread and butter, most favorite way of dealing with real estate purchases. I went from buying two properties in my first year of real estate to doing 14 deals in the next 9 months and making $140,000!
I didn’t need any money anymore to do real estate deals. Everything had changed. I learned that I could put $10 down as the earnest money on a piece of property and I could still sell it!
So, since you will be buying your first rental property, here’s how I did mine. The first deal that I did with creative financing (using a lease option) was a house I closed under contract for $122,000 through seller financing and with $10 of earnest money invested.
I had 5 years before I needed to pay the sellers the entirety of the money, and 3 months before I had to make my first payment. Once my payments began, I paid their mortgage every month with the money I sent to them.
Just after we closed, I put the property up on Zillow for $145,000 and had a call back almost immediately for someone offering $135,000 in cash.
They were prepared to buy the property right away at their offer price, which would have freed me from making any payments, eliminated the need to pay the sellers for five years, and also made a quick $13,000 in the process.
Now, the problem is that their offer was totally dependent on them selling their current house. I did not want things up in the air. So, I suggested that instead of buying it right away that they rent it until they can officially buy it. I was planning to do a “sandwich lease option,” which is basically using a lease option to buy a property and then another lease option to sell the property.
I recommended that they rented it, which was an idea they liked, so we agreed on $1000 monthly rent. On the first day we met, they gave me $3000 for their first three months.
Tell me that is not the best option for buying your first rental property!
But, the story did not end there. A week later they called me to say that their house in Chicago had closed and they would be able to close out their lease option with me about two months later. I said, “Okay, no problem. We are still going to stick with our lease option agreement for now because it can take 6, 7, 8 months for real estate sometimes since things can be crazy.” And they said, “Okay, no problem. Sounds good.”
Y’all, they paid for their first three months of rent upfront, so that they could move their things down from Chicago to Tennessee at their leisure. Their house sold by the end of that time, and when we sat at the closing table after those three months, they brought a cashier’s check for $135,000.
I closed on the sale of the house with them, closed on my lease option with the original sellers, and walked away with $13,000. $13,000 for “8 weeks of work,” which really only took me a handful of hours in total from start to finish! Oh, and they paid the closing cost, so I had closer to $15,000 in hand at the end.
So, all in all, I had the $3,000 from the three months of rent that they paid me upfront, PLUS the $13,000 difference between the prices at which I bought the house and sold the house.
That is $16,000 in 8 weeks with hardly any hours!
How does that sound?!
When I was working for my mom, I was making only about $2000 a month. So, in 8 weeks I made 8 months’ worth of income with my VERY FIRST DEAL!
And that was just the start. I hit the ground running! I closed deal after deal and within 9 months had made nearly $140,000. Not all of the deals were the same, either. I had several that worked perfectly as lease options, complete the with a lease option fee. Others were similar in structure to this one that was more “wholetail” because I got it for kind of a wholesale price, and then sold it at a retail price.
This was all from using creative financing for buying your first rental property!
My life has never been the same, and that is exactly how I like it.
So, what are you ready to do? If you are interested in buying your first rental property, I want to get you started right. Check out my freebie offering at GetYourFirstDeal.com so you can start building your education right away.
But, if you are serious about this real estate thing, then First Deal Done Fast is the course for you. Not only will I walk you through every single step of the process from talking to sellers, negotiating the deals, to closing, you will also connect with an incredible group of ladies who are committed to their financial freedom, too.
Now is the time to start buying your first rental property! What are you waiting for?!
Comment below with what you loved about my story and any questions you have for me.