Kiera Underwood
Investor Specialist, Table Investments
Table is built by investors. That means we are building this company for ourselves as much as for our clients. It’s pretty rare and definitely cool. We want to share our deals with you. We want to let you see the ups, and downs. To learn from them the same way we have. We share case studies, but we wanted to share something more personal. Something that felt a little closer to home. So we’re taking you back to the beginning and telling you all about our very first deals. This is Kiera’s.
How old were you when you bought your first investment property?
26
What did you buy?
I house hacked a duplex. 2700 sq feet. 2 bed 2 bath on each side. Built in 1982.
Was it a good investment? (AKA- would you buy it again now)
I consider it a pretty profitable house hack. I did a conventional loan and negotiated that the seller pay the max amount of closing costs that he legally could, so I put very little down. I also got a live-in room mate. So I’m saving enough per month verses my pervious home costs that I’ll have regained/not paid out in expenses everything I put down, in 10 months.
In a year I plan to move out and I’ll be cash flowing $450 a month.
Was it hard to get a loan? How much cash did you need?
It was pretty easy to get a loan. Due to using FHA and negotiating closing costs, I only brought 5k to closing.
Did you have anything go wrong in the first year?
Yes, my plumbing lines had root intrusion. I should have scoped at inspection and cleared the line. It would have saved me the couple hundred I spent in diagnosis from two plumbers and the time it’s going to take me to replace the flooring. Thank god I have some extra flooring on hand and friends that know how to replace flooring though!
I also didn’t have my tenant re-sign a lease with clear expectations early enough. So, when she paid late, I had no legal way or any built in expectation to enforce a late fee. I also didn’t do a walk through with her immediately in order to charge her for any future damages. All bad property management moves that I’ll correct in the future!
I also had someone steal from the home. I discovered after the break in that a window didn’t lock properly. I also didn’t change the locks when I moved in. I’ll check all the windows in my next property and change the locks as soon as I purchase the next one!
My heater wouldn’t come on during the holidays, but luckily I had a fireplace to warm the home until shops re-opened! My home warranty covered that and it was only a $70 service fee!
How long did you keep the property?
I still own the property and plan to keep it for it’s cash flow for several years.
What advice would you give to someone buying their first investment property?
If you’re house hacking and can save 5k, you’ve got enough to start. If you’re not talk to your lender about around how much you’ll need at closing and how much you can legally ask the seller to cover. Don’t think that you have to have an insane amount of cash reserves to get started!
For down payment cash concerns – negotiate that the seller pay your closing costs! If he doesn’t want to request that you raise the price the amount you’d like him to cover. Then there is no reason he should decline and you keep that cash in your pocket.
For repair/mechanical cash concerns: When you invest in a property you can estimate about how long it’ll be until major mechanicals go out. 15 years for ac ($3k), 20-30 for heater ($3k) and 10 for hot water tank ($3k). If they’re going out really soon, just get a home warranty for the first couple years so that when it goes out, they’ll be replaced. That’ll cost just $600 a year and provide a lot of peace of mind.
SCOPE YOUR MAIN LINE AT INSPECTION. If you’ve got root intrusion in your main line you can have them cleaned and see if it’s just something you need to clean regularly or if there is too much damage and a main line collapse is likely. A main line collapse can sometimes cost over 10K so it’s not something to gamble on, unless the returns are worth it!
Use property management. I’ve already ran into issues that that I didn’t feel comfortable correcting. A property manager takes all the heart out of it and gets the job done.
Dont do value add or a rehab for a first property. Step one is risky enough if you don’t have a lot of cash reserves, no reason to add more risk when there are so many great deals out there that don’t include that extra risk.
Invest in the markets that make the most sense. I love investing in OKC. And if your market allows it, house hack there as well!