Unexpected investment.. thoughts?

[Jeremy Segermeister]

Wanted to get everyone’s thoughts on this deal. I recently closed on a property in Hawaii because I never found ANYTHING that could cash flow in the Bay Area. I was not planning on buying another unit for a few months but I came across this one bedroom condo literally around the corner from my house for $439k. There was another unit in the same complex for $499k that is under contract now for ~$470k (slightly updated).

I put in an offer at $430k with an aggressive close date. The seller had another offer at full ask. Despite having the lower offer, I just received the verbal acceptance, on account of my financials and close timeline!

Now I’m a bit nervous because I wasn’t expecting to buy something so quickly. I expect the unit will be able to rent for $2500/month once fixed up ($15-20k in rehab). Nearby complexes with more amenities are renting for $3k+. Cash flow should be just about break even with 25% down.

I normally would not considering buying something to simply break even, but I’m very bullish on the area. It is right near downtown Campbell and is close to the future Google HQ in San Jose. There really are not many units at this price point which makes me think it will appreciate over the next 5-10 years.

What are all of your thoughts?

[John Corey]

@Jeremy Segermeister, why make an offer if you were not prepared to move forward? I am not going to advice you on the specific deal.

I do think this situation is a great opportunity for you to think about why you are investing. Once you are clear, then you will know if you should be making offers or not. 

I am not saying to go with or walk away from the deal on the table. Just that you need to get clear about your motivations. This accepted offers is going to clarify things for you if you pause to really think about your motivations.

Good luck either way.