How We Found (and Funded) Our FIRST Real Estate Deals

TL;DR

First real estate deals offer invaluable lessons, not immediate riches.

Transcript

on this episode of Real Estate Rookie we are going to be breaking down our very first deals welcome to the Real Estate Rookie Podcast i'm Ashley Car and I'm Tony J robinson and today you get to hear the origin story of Tony and Ashley so we're both going to break down how we got started and what our deals look like what lessons we learned and maybe... Read More

Key Insights

• Tony's first deal was in Shreveport, Louisiana, chosen due to family connections and affordable real estate prices.
• Ashley found her first deal locally and partnered with someone who provided the capital, showcasing different funding strategies.
• Networking with local agents, property managers, and banks was crucial for both Tony and Ashley in understanding their respective markets.
• Both hosts emphasize that the first deal is about learning and building momentum, not necessarily about making significant profits.
• Tony's deal was financed entirely by a local bank, which funded 100% of the purchase and renovation costs, a unique financing strategy.
• Ashley managed her first property renovation through a partner's roommate, saving costs and learning project management.
• The first property deals taught them about the importance of cash flow, unexpected expenses, and the value of long-term property holding.
• Both hosts eventually sold their first properties, using the equity and experience gained to further their real estate journeys.

Questions & Answers

Q: How did Tony choose Shreveport for his first investment?

Tony chose Shreveport, Louisiana, for his first real estate investment due to family connections. His mother and stepfather briefly lived there, which allowed him to visit, explore the area, and realize the affordability of real estate in the region. This personal connection and the market's potential made it an attractive choice for his first deal.

Q: What strategy did Ashley use to fund her first deal?

Ashley funded her first real estate deal by partnering with someone who had the capital. Her partner provided the money and held the note on the property. This arrangement allowed Ashley to manage the property while her partner received monthly payments with interest, showcasing a creative financing strategy for beginners without significant capital.

Q: What role did networking play in their first deals?

Networking was crucial for both Tony and Ashley in their first real estate deals. Tony met with local property managers, agents, and banks to understand the market and build a support network. Ashley leveraged her connections as a property manager to find a partner and manage her first property, highlighting the importance of building relationships in real estate.

Q: Why is the first real estate deal important according to Tony and Ashley?

Tony and Ashley emphasize that the first real estate deal is important not for immediate financial gain but for the invaluable lessons it provides. It helps investors understand the market, learn about property management, and build confidence. The experience and momentum gained from the first deal are crucial for future success in real estate investing.

Q: How was Tony's first deal financed?

Tony's first real estate deal was financed through a local bank that offered a unique loan product. The bank funded 100% of the purchase and renovation costs, provided the total did not exceed 72.5% of the after-repair value. This creative financing allowed Tony to invest with minimal out-of-pocket expenses, illustrating the importance of exploring local financing options.

Q: What challenges did Ashley face in her first renovation project?

Ashley faced several challenges during her first renovation project, including unexpected repair costs that drained her savings. She had to upgrade the electric panel to install a planned split unit, which was an unforeseen expense. Despite these challenges, she managed the project by leveraging her experience in property management and utilizing her partner's roommate for repairs.

Q: What lessons did Tony and Ashley learn from their first property sales?

From selling their first properties, Tony and Ashley learned the importance of long-term property holding and the potential financial benefits of equity and appreciation. Both sold their properties for a profit, which helped them during transitional phases and provided capital for future investments. This experience highlighted the value of strategic property sales in real estate investing.

Q: How do Tony and Ashley view cash flow in real estate investing?

Tony and Ashley view cash flow as just one aspect of real estate investing. They emphasize that while cash flow is important, the first deal's primary purpose is learning and building momentum. They also highlight the significance of equity, appreciation, and strategic property sales, which can provide substantial financial benefits beyond monthly cash flow.

Summary & Key Takeaways

• Tony and Ashley discuss their first real estate deals, focusing on the lessons learned and the strategies they used to get started. Tony invested out of state, while Ashley found her deal locally and partnered for funding.

• They highlight the importance of networking, understanding the market, and managing renovations, emphasizing that the first deal is more about learning than making money.

• Both hosts eventually sold their first properties, utilizing the equity and experience gained to expand their real estate portfolios, illustrating the long-term benefits of initial investments.