My First Real Estate Investing Deal And What You Can Learn From It

Every real estate investing deal is an opportunity for both profit and education. Well my first deal was a good combination of both. When I decided I wanted to get involved in real estate investing it took me eight months to decide to do my first deal.

This particular deal came as a result of networking in my local real estate investor group. A local Memphis investor found a deal on a 3 bedroom, 2 bathroom home in a moderate to lower income area where people still like to buy homes. This was a wholesale deal for the other investor and he assigned his contract to me to close on the deal. I was buying the property for $58,000 and $5,000 of that went to the investor for assigning the contract to me and $53,000 went to the seller of the property. I had the cash available so I paid all cash for this deal and for $4,000 in repairs this property needed. The after repaired value of the property was approximately 95k.

I had decided I wanted to do a rent to own or lease option deal with this property. I put a yard sign out with property flyers and had links to a website with inside pictures of the property. At the time I was doing this a more experienced investor told me I should try to retail the property and take the quick cash and go on to the next deal. Well as a new investor I wasn't sure how long it would take for me to find my next good deal so I wanted to get the maximum out of this property. After about a month(and about $800 in ads) I found a tenant I considered suitable and agreed to take a $2500 option fee plus $875 per month and a sales price of $99,000. If the tenant pays the rent by the first of the month then $100 counts as pay down towards the purchase price.

In the event the tenant doesn't buy the property within the first 2 years I can either lease option to another tenant or just try to outright sell the property.

If I had sold the property quickly I may have sold for $89k and paid $5k in selling fees and netted about $20k and would have paid about $7k in taxes on that income. Instead by going after lease option it may take 2-6 years to sell and I should get a $99k or better selling price with much less selling costs and should net about $35k of which about $5k will be taxed as capital gains. The lease option method will net me about double what retailing would have done, however it would have been nice to have access to that cash for doing more deals. I think the $15,000 profit quickly would have been better than $30,000 in a couple of years plus the things I could have done with the $62,000 in cash I put into the property.

The tenant I chose has not once in the first nine months paid the rent on time so he hasn't earned the $100 monthly rent credit, and has on average had to pay an extra $100 each month in late charges. I don't expect this tenant will be able to refinance, however his job status and income have been going up while he has been in the property, and the current market value is now $105k. The tenants father is a mortgage broker and if I get to the point of evicting the son the father has told me to let him catch up the sons rent before filing for eviction so that part is really in my favor.

From a humanitarian perspective I like lease option deals as I am really helping someone who could not rent otherwise. I will only do a lease option to someone I believe is improving their credit and job situation and should be able to buy the house within 24 months. With 12 months of on time payments verified by copies of checks many mortgage brokers can get your tenant financed as a refinance type of deal.

Even though the property provides great cash flow I would rather sell it and get a big check and use the cash to go after the next deal.

Some things I learned on this deal that you can use: 1. We had a yard sign with flyers in a flyer tube plus links to view pictures on a website. Before we would show the inside of the property we insisted any prospects should view the pictures online first. We ran ads in the major local newspaper and we got 20 times as many calls from the yard sign than we did from the newspaper. However this street had decent traffic, other properties I have are more secluded. Always use a yard sign and flyer box and have pics online with good descriptions and always highlight the kitchen and bathrooms. 2. If I had the deal to do all over again I would have retailed the house and tried to sell it quickly. I could have rolled this deals cash into more and more deals and made much more money. My opinion now is that every investor who isn't already financially well off needs to go for the quick income first and progress to long term deals second. 3. I probably should have waited a little longer for a stronger tenant. 4. You can not do this type of lease option transaction in Texas now due to some strange laws that got passed in 2005. However I live in Tennessee and we don't have any anti-investor state wide laws yet. We do have a bad local one related to trash left over from evictions but that is minor in comparison

David offers a free E-course on quick start strategies for getting started in real estate investing that is delivered free via email and tele-clinic at: http://www.FreeRealEstateInvestingCourses.com

Bulgaria Property Investing - The Way Forward?

Anyone with any interest in property investment abroad would have been hard pushed not to have heard about the potential growth area of Bulgaria. During the last 12 months, property prices have risen, on average, by around 25 percent. But remember, this is an average and some savvy investors have achieved a gain of 100 percent, in the last year!

This is not to say that the market has hit stagnation. On the contrary, Bulgaria has a very rosy future with further gains predicted. Currently, property is the fastest growing asset in the country and is still showing considerable growth.

Bulgaria has become increasingly stable over recent years, economically, politically and socially. The country is going to join the EU in 2007, which suggests that property prices will continue to rise, over the coming years.

Tourism is also a growing industry with approximately 4 million tourists visiting, last year, an increase of 13.5 percent on the previous 12 months. Interestingly, last year, the number of British tourists increased by over 60 percent. One of the main reasons that Bulgaria is so popular with tourists is that it offers such a wide range of holiday types including, ski, mountains and beach holidays. This year-round appeal means that tourists flock to Bulgaria every month of the year, perfect for the buy to let investor.

At the moment, foreign individuals are not allowed to own land in Bulgaria. Rather confusingly, foreign investors are allowed to own buildings but not the land! This will change when Bulgaria joins the EU in 2007, as property laws will have to harmonise with the rest of Europe, therefore allowing individuals to purchase land in Bulgaria. The relaxation of these rules is likely to lead to a considerable boom in foreign ownership and consequently in property prices. If you want to get in before the rush, it is possible to purchase property through setting up a Bulgarian company which costs approximately £650.

New build prices in Bulgaria currently start at approximately £20,000 for a brand new studio apartment; up to £120,000 for a luxury three bed apartment with superb views. Individual properties that require renovation vary dramatically in price and vendors are often up for negotiation so do your research and get haggling!

Buying land is also a very good way of maximizing gains in Bulgaria. Consider that a new build, off-plan apartment will sell at around 900 Euros per square metre, but that land with planning permission would sell at around 60 Euros per square metre. A conservative expert suggests that a property could be built (including the land costs) for 400 Euros per square metre. As you can see, the figures certainly stack up if you can cope with project managing a new build in a foreign country.

A real winning point that Bulgaria has to offer is the sheer variety of resorts. Beach lovers will be delighted with the choice of resorts, namely Albena, Golden Sands, Sunny Beach and Duni. Bulgaria has a Black Sea coast that is served by two airports, Varna and Bourgas. It is the beach resorts that have seen the largest surge in property building in recent years, with most off-plan apartments being available on the coast.

As well as the beach resorts, Bulgaria has internationally renowned ski resorts, which double up to offer wonderful mountain hiking opportunities, during the summer months. The Balkan Mountain range is the backbone of Bulgaria and offers a range of ski resorts for both beginners and experienced skiers. Bansko is currently considered to be the main resort; however, there are many other smaller resorts to choose from, should you want to get off the beaten track.

Sofia is the capital city of Bulgaria and offers wonderful investment opportunities. Many large international companies are investing in Eastern Europe, due to the cheaper yet dedicated workforce. More jobs mean more employees requiring central accommodation, a dream for property investors.

Bulgaria has so much to offer the international property investor, with something for every taste and budget. With a wide range of resorts and a growing economy, Bulgaria justly deserves a second look!

Providing essential information on buying Bulgarian property, Tem Pearson is dedicated to offering all the necessary information for people looking to buy property in Bulgaria. Visit www.buying-property-abroad.info/Bulgaria

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