A lot has changed in the last year! Many of you are new readers since then (super happy you're here!), so you might not know I attempted to buy a multi-family rental property about this time last year. Fortunately, I documented the entire saga so you can quick go back and refresh what happened to me last time I tried to buy.
I don't consider the last time as a failure though. It taught me a lot of great lessons: how to act around the seller's agent whilst viewing the property, what level of service to expect from a realtor, how to fill out all the paperwork, what to include in the paperwork, what the process of submitting an offer looks like, how to settle on a price, and what to expect from getting inspections sorted out and more.
Now that I have been in my new town for two months and have settled into my new job nicely, I decided it was time to start looking for property in this area. Starting the process was as easy as asking people who they used as a realtor and finding one who understood the investor side of buying property. I was moved at MegaCorp's behest, so they're paying for basically everything. They gave me a ton of money to move here, and will also be covering my closing costs. I cannot state how awesome that is since that's about another $8k I'll get to keep in my pocket.
My goal this time around is to find a 3-4 unit multi-family property that meets the 1% rule. I will also be following the guidelines listed in Step One of my first post on starting the house hunt, with a few small changes:
I will purchase one property with a purchase price of
$155,000-$225,ooonot to exceed $100,000 once every 24 months. I will finance the property using a VA Loan with a 5%10% down-payment. Depending on total purchase price, I will budget for up to 2% in closing costs and no more than 3% in repairs maximum. The maximum all-in cost including down payment, closing costs, and repairs should be no more than $15,000. [With closing costs reimbursed after close].
Funny how much hasn't changed in a year. Same goal, new location.
So I went on the hunt. This search is incredibly different from the last one. There are TONS of properties on the market. Not only are there tons of properties, but 93.4% of them meet the 1% rule, and 40% of them almost meet the 2% rule. [Note: %'s are entirely made up. Just know if I wasn't afraid of breaking a window, I'd throw a rock and hit a property that at least met the 1% rule.]
My awesome new realtor set me up with an automatic search that pushed new listings straight to my email. I could check the new properties out while sitting
on the toilet at the lunch table. One property caught my eye so I emailed my realtor and asked to set up a showing. They can require anywhere from 24-48 hours prior notice if they have existing tenants, so then I had to wait. Later that day, another property a few blocks away popped up so I asked if we could see that as well.
The first property is a duplex. The list price is $119,000 and rent is $1465/month. I wasn't particularly enamored with the property for several reasons. The first, it was only a duplex and I want one with at least 3 units. Secondly, both units were occupied and due to getting VA financing, I need a property with an open unit to move into. Third, the lower unit tenants had lived there for 7 years and didn't wish to move, but I wasn't sure I wanted to deal with them and their at least 5 cats. I couldn't keep track of them all during the showing. The upper unit wasn't anything spectacular.
I was a huge fan, however, of the original carriage house in the backyard. Not a huge fan of the cat that fell out of the loft and scared the living beejeebus out of us though! Good thing it has 9 lives because I'm pretty sure it used up a few. It would've been really awesome to renovate the carriage house into a little apartment or even super sick workshop space, but it would've cost $$$$$ with very little return. Not about that life right now.
The second property is a triplex (win), has a list price of $79,900 (double win), and rents out for $1485 a month (TRIPLE WIN). 2100 sq ft of history in a beautiful house. There are two good tenants in it right now paying $1100, which leaves a studio apartment empty (WIN X5). The house is in fantastic shape considering it was built right after the turn of the century. The last one, not the most recent one. A newer roof that includes new sheathing, high efficiency furnace, new plumbing, and new electrical. [Should I count that as one big win, or lots of little wins?!].
The seller's agent let us know there had been a showing right before us, with another scheduled the next day. The potential buyer had previously been interested, so the agent let us know they would be submitting an offer. If I wanted a shot at this house, I had to move fast.
Which is why…… I submitted an offer yesterday afternoon! Even better, the seller accepted my offer last night!
So...... that means........... I'M BUYING A HOUSE. AHHHHHHHHHHH!!!!!!!!!!!!!!!!!
If it seems sudden, that's because it is. The whole process, from contacting the realtor to getting my offer, took a week. That's it. 7 days.
Like I said, it could not have been a more different experience than last time.
I am THRILLED TO DEATH GUYS. But also scaredhappyexcitedpetrifiedanxious.
It's fine. I'm fine. I can do this. deep breaths
Let me introduce you to my property to be!
Yes, this beautiful Neo-Georgian Revival house only cost me $85,000. I love living in the Midwest! Coastal peeps – what do you think this property would go for in your neck of the woods? Shoot me a comment!
If you're saying, wait, I thought the list price was $79,900 you're right. I offered over list due to the competition I was facing. Apparently, the seller had 3 properties to sell, not just one, a fact I discovered as I was heading into the office to sign my offer. Everyone else put in a bid for a package deal for all 3 properties. I was the only one that wanted just one, and I offered over list.
Did I over pay a little, considering there was no counter offer? Probably. But the numbers still work out.
The seller liked a number of things about my offer.
- I loved the house for being a well-preserved, beautiful piece of local history.
- I wanted to live in the house.
- It was my very first property. Everyone else was an investor.
I didn't even have to write a super cheesy letter to the seller! The seller's agent liked what I had to say and passed those feelings on to the seller.
Being a good person still helps, even in 2017.
So now that I've waxed poetic about my crazy last week…….. what's next?
Paperwork. Lots and lots of paperwork.
Since everything moved so fast, I have a lot to do. I need to schedule inspections to take place within the next 14 days (don't forget the 48 hours of notice to the tenants), scout around for the best deal I can find in regards to financing, get homeowners insurance, and get ready to move my stuff into a studio apartment. All of this has to be done in the next 7 weeks, because I close March 24th!
Thank you to everyone that followed along the my rental journeys! I truly could not have done it without your support, guidance, advice, and encouragement. It really does take a village.
Stay tuned as I go through the process!