The Baby Steps to Your First Rental, Flip, or Wholesale Property (6 Case Studies)

Have you heard the old expression that your first time is always the hardest? With buying your first (or next) real estate investment, this is very true. It’s like taking those first steps as a baby. You’re bound to be wobbly and unsure of yourself early on.

But sometimes all you need is an example of what worked for others. Like the baby getting help from an adult, it’s helpful to lean on the experience of someone else.

So in this article, I will share 6 examples of first investment properties that you can study, copy, and take action on. My previous case study article shared examples of people using their home (i.e. principal residence) as their first investment property. But in this article, the examples will be of rental, fix-and-flip, and wholesale flip deals.  You’ll learn how they financed the deal, what the numbers looked like, and how they found it.

Now let’s get started with the case studies!

Paid Cash For a Small, Foreclosed Multi-Unit Rental

First Investment Property Example #1- Rental Property
Name:	John from ESIMoney.com
Location:	Grand Rapids, Michigan
Strategy Used:	Rental Property
Property Type:	2 rental houses on 1 lot
Financing Used:	Cash
Source of Deal:	MLS
Purchase Price:	$66,000
Repairs/Upfront Costs:	$43,000
Total Purchase Cost:	$109,000
Gross Annual Rent:	$24,000
Annual Expenses:	-$11,705
Net Income:	$12,295
Cap Rate:	11.28%

John retired from a corporate career in his early 50s, although he had enough wealth to reach financial independence in his 40s. I featured many details of his story in an investor profile.

John said that when he first started he face 2 big obstacles.

1. No knowledge about real estate investing
2. Strong fear of losing everything

He overcame #1 and #2 by interviewing and being mentored by a local friend who invested in real estate and worked as a real estate agent. He also read and studied intensely on his own.

John bought during the great recession of 2010 – 2012. This was a great move for getting low prices and large income. But it was also part of the challenge above. Fear was everywhere, and “popular sentiment” said it was foolish to buy real estate then. But facing that fear intelligently proved to be a very wise financial move.

Bought an Older Rental House For Cash Flow

First Investment Property Example #2 – Rental Property
Name:	Jim Parsons
Location:	Greenville, SC
Strategy Used:	Rental Property
Property Type:	Single Family House
Financing Used:	Cash
Source of Deal:	Wholesaler
Purchase Price:	$39,900
Repairs/Upfront Costs:	$15,000
Total Purchase Cost:	$54,900
Gross Annual Rent:	$9,000
Annual Expenses:	-$5,000
Net Income:	$4,000
Cap Rate:	7.29%

I first got to know Jim through personal real estate coaching. While he was new to real estate investing, he had years of experience as an engineer and project manager. In fact, when I met him he was managing industrial construction projects that cost millions of dollars!

Jim was very busy when he got started. He was traveling internationally and had very little time to be on site for his investments. So, he leaned on others to find deals for him. That meant he networked particularly with other wholesalers in his local market, and he got on their new deal lists.

He found this first deal by being on one of the wholesaler’s email lists and jumping quickly on a deal. He did have cash from the liquidation of other investments. So, that’s how he funded this first deal.

Jim went on to buy 5 houses that first year, and since then he’s bought big apartment complex deals with hundreds of units.  The thing that impressed me most about Jim’s first deal was that he worked with his strengths and compensated for his weaknesses (lack of time).  He also became LASER focused on a strategy (lower-priced rentals) and a location (a zip code with affordable houses in his case).

A 28-Year Old Got Started Flipping a House With Private Money

First Investment Property Example #3 – Fix and Flip
Name:	Dorsie Boddiford (assets101.com)
Location:	Marietta, Georgia
Strategy Used:	Fix and Flip
Property Type:	Single Family House
Financing Used:	Private Money Lender
Source of Deal:	Walking for dollars or as Dorsie called it “Yard Selling” where you walk around a neighborhood to see if anyone has a yard for sale!
Purchase Price:	$67,000
Repairs/Upgrades:	$36,000
Total Purchase Cost:	$103,000
Resale Price:	$145,000
Gross Profit (before commissions & closing costs):	$42,000

Dorsie began investing right out of college. She got started much like I did by finding good deals and using money from private individuals to purchase and repair properties.

I like this case study a lot because it addresses a couple of major challenges new investors face – finding the money and finding a deal.

Dorsie had a private money lender who was willing to loan up to 70% of the full, after repair value of the property. This fairly common in the private or hard money lending world. And because she found a deal at a very low price, she was able to finance most of her purchase AND repairs. This meant she could do the deal even without having the money personally.

And to find such as good deal, she didn’t use the same strategies as everyone else – like simply looking on the MLS. Instead, she did the uncomfortable thing of going to neighborhoods, talking to people, and asking questions. A lady working in her yard told Dorsie about a vacant house across the street and even gave her the owner’s phone number! Dorsie was the only one to know about this deal, and she made a profit as a result.

Dorsie used what she had – time, energy, and a willingness to hustle. And she leveraged others for the things she did not have, like money.

Two New Investors Wholesaled a Property and Made $8,258 Profit

First Investment Property Example #4 – Wholesale Flip
Name:	Gary Burleson and Sean Brooks (brooksandcompany.net)
Location:	Myrtle Beach, South Carolina
Strategy Used:	Wholesale Flip
Property Type:	Single Family House
Financing Used:	None
Source of Deal:	Classified Advertisement (there’s was an in a local classified paper but there are also ads online, like craigslist)
Purchase Price:	$35,052
Costs (appraisal, inspection, termite letter)	$690
Total Purchase Cost:	$35,742
Resale Price:	$44,000
Net Profit:	$8,258

I had the pleasure of coaching Sean and Gary in 2011 when they were first starting in real estate investing. They partnered together to get started, but they’ve since gone on to do things on their own.  But their first deal made $8,258, gave them confidence, and moved them forward.

The deal was a quick flip where they did not do any repairs. They simply negotiated the purchase with a seller, got the house under contact, and quickly found a buyer at a higher price. This is also called wholesaling, which is different from fixing and flipping for full price (aka retailing).

Gary and Sean got a call off one of their advertisements from a seller who inherited a house that needed work. It also had a debt against it still, and this heir didn’t want to mess with the repairs or making payments until it sold traditionally. So, Gary and Sean made an offer to relieve the seller of the problem, and he accepted.

Originally Gary and Sean planned to use private money to buy, fix, and flip the property. But they also decided to send the deal to their list of other investors at a price that made them a profit. Someone wanted the deal, so Gary and Sean assigned their contact to the new investor for a fee of $8,258. The new investor actually closed on the deal, and Gary and Sean received their profit at closing.

Earned $10,000 On His First Wholesale Flip

First Investment Property Example #5 – Fix and Flip
Name:	Curtis Fillers
Location:	Charlotte, North Carolina
Strategy Used:	Wholesale Flip
Property Type:	Single Family House
Financing Used:	None
Source of Deal:	Referral
Purchase Price:	$50,000
Repairs/Upgrades:	$0
Total Purchase Cost:	$50,000
Resale Price:	$60,000
Gross Profit:	$10,000

Curtis is another investor I met through personal coaching. When we first started, he had to learn everything from scratch. I asked him to start studying his market, to start calling for rent and for sale signs, to build a list of investor buyers (because he was planning to wholesale properties), and to basically build a knowledge foundation.

Apparently Curtis took the advice and he started doing more marketing with signs and driving for dollars.  He also got business cards and started telling everyone he knew that we was a real estate investor who bought houses. All of these marketing seeds finally paid off.  Someone at his church heard Curtis’ “I buy houses” elevator speech, and they told him about a vacant house that needed to be sold.

One of the biggest lessons Curtis said he picked up during coaching was to just listen as much as possible during negotiations.  On this deal Curtis did that very well.  He met the seller at the house, he listened, asked questions, listened some more, and eventually came to understand what the seller wanted.  The seller gave Curtis a price that was a lot lower than what he guessed the true value of the house was.

After this appointment, Curtis knew he was on to something, but he also knew he didn’t have the cash to buy it himself.  So, he took advantage of some relationships he had built with cash buyers in that area (remember the key step I recommended to him earlier).  He called a cash buyer who he trusted and asked him if he’d look at this house with him.

The investor buyer was very interested, and he told Curtis that he’d buy the house for $60,000 cash.  So, Curtis went back to the seller and offered her $50,000 cash.  The seller accepted!  He put the deal under contract, and then he signed an assignment of contract to the investor buyer.  This entire process from first meeting to contract took about three weeks.

In the end, the cash buyer closed on the house, the seller got her $50,000 cash, and Curtis walked away with a $10,000 check for assigning his contract to the cash buyer. This entire deal seems so simple, but I can tell you that Curtis did a lot of hard work and he exhibited a lot of courage to get it done.

I Had No Money or Experience, So I Became a Bird Dog

First Investment Property Example #6 – Bird Dog
Name:	Chad Carson
Location:	Newnan, Georgia (when I started)
Strategy Used:	Bird dog (variation of wholesaling)
Property Type:	Single Family Houses
Financing Used:	None
Source of Deal:	MLS, Direct Mail, Driving For Dollars, Eviction Landlords
Purchase Price:	Various
Profit:	$2,000/deal

Obviously, this case study is about me! Unfortunately I don’t have pictures or the specific numbers from my first deals handy. But I thought my story of starting at 23 years old using the “bird dog” strategy could be helpful to some of you.

I had just graduate from college, and I decided a more traditional career (medical school in my case) wasn’t for me. I didn’t have any college debt thanks to a football scholarship at Clemson University (go Tigers!). But I also had the challenge of no savings or real-world experience. So, I found a more experienced real estate investor (my father in this case, but it could have been someone else) and asked if I could help him find deals.

I contributed my time, hustle, and energy to “sniffing out” good deals like a bird hunting dog. And when I found one, I “pointed” to it so that my father could buy it. For each deal I earned a fee ($2,000 in my case), and I learned a LOT in the process.

Becoming a bird dog started VERY slowly for me. To find potential deals, I sent letters to landlords, scoured the MLS daily, and drove around neighborhoods looking for vacant properties. But it took 6 months to find my first deal, even working every single day! Like some other recent grads, I lived at home since I did not have any income coming in.

But during the next 6 months, things took off! I found 12 deals that my father bought. Some where rentals and some where flips. And after the first full year of being a bird dog, I had learned enough to move to another state and get started on my own fixing and flipping houses with a business partner.

If you want to also use the bird dog strategy, you will need to get your real estate license in most states in order to earn referral fees. But getting your license is actually a helpful process so you can learn the basics of real estate. And to minimize costs, you can get a referral license that allows you to earn commissions for referrals but not for listings or buyer representations.

What Will Your First (or Next) Investment Property Purchase Be?

I hope these examples of how to buy your first investment property have been helpful. Case studies show that no two investors start in the same way. You have to leverage your strengths, compensate for your weakness, and take action until you find early success.

Be sure to let me hear more about your first deals. What strategy did you use? How did you find it? How did you finance it?

And if you haven’t done a deal yet, what is your plan to do your first deal? What are the biggest challenges you face?

Please leave your comments below. I’d love to hear from you!