Another Attempt at Starting Out

[Todd Aaron]

My first attempt with an excepted offer ended with a lot of issues found on the inspection and the seller was not willing to accept a lower offer.  So I had to let that one go.  

I ran across several deals after that but I was too late on all of them.

The other day I came across one that was listed the day before in exactly the area I was looking for but I couldn't get in to see it and make an offer at lunch and was scheduled to see it right after work, then found out they had accepted an offer that afternoon.

The next day I find out that the offer fell through (buyer backed out the same night as the offer), so I got to see it and made an offer.  They were asking $122,500 and I offered them $120,000 and asked that they pay closing costs. They countered with accepting the closing costs but raised the price to $123,500. 

I wanted to keep negotiating and win a little more, but then realized they could take my counter to their counter and sit on it and use it to entice a better offer from someone else. So I signed it and moved forward.

The inspection came back with several issues, but a couple of them were big ticket items.  The A/C unit outside and inside were both from 1990 and way past their life expectancy and they are a 1.5 ton and the square footage calls for a 3.5 ton, so it is undersized.  

The gas water heater came back in poor condition and was showing signs of flame rollout (meaning fire had come out from under the water heater to the outside - fire hazard!). 

I talked to the realtor tonight and she is going to talk to the listing agent tomorrow about options. 

The current owners have used this as a rent house for years and apparently told the listing agent that they expect there will be some things that come back on the inspection that would need to be negotiated.  So I am hopeful. 

The house is a 2 bedroom, 2 full bath with a two car carport.  The plan is to increase value by converting a luckily configured dining room into a third bedroom and close in the car port and create a two car enclosed garage. 
I am also considering opening up a few walls (between entry hall and living room and between living room and kitchen) to give it a lot more roomier feel... and also doing some updating to the kitchen and bathrooms.

The plan will be to live there (i'm getting a conventional loan with 5% down which requires that I owner occupy for the first year) while I do the modifications and upgrades and possibly rent out the master bedroom during that time to offset some costs. Then find another place and set this one up as a rental... hoping that the improvements will raise the value enough to drop the PMI.