Taking the Dive! - Finally bought my first property

[Raleigh Anthony Salazar]

Hey BP peoples!

I finally did it and bought my first property yesterday. I bought a short sale in an attempt to get a little bit of a deal since the market here in Seattle/Tacoma area is pretty nuts. Being my first property, I utilized a FHA loan with a Home Buyer Advantage DPA (down payment assistance) program. Received a decent interest rate at 3.875 but wasnt too concerned with it as I intend to refi or sell after renovation.

Property Info: Tacoma, Wa, 98408

Bank Approved List Price: 279k (1st short attempt fell through at 210k so negotiator was already attached to the property)

Purchase Price: 272k, overall loan value at ~267k with the DPA loan at ~10.5k (covers a little bit of closing costs)

Appraisal: 275k (all comps were 9 months old, is this normal? or can i read into it that there is 9 months worth of flucuation in the market for this appraisal?)

3bd, 1.5bath, 1124sqft, on ~.2 acres with 1 car attached, 2 car detached garages (nice selling point given my hobbies)

Reno Plan:

Home is mostly cosmetic issues. remove popcorn ceilings. remove carpet and refinish hardwoods underneath, bathroom and kitchen updating, landscaping, gutters, trim and paint, and some work on the detached garage (new roof).

Doing 90% of the renovation myself as I have done work on homes with my dad in the past. targeting a budget for 15k for materials and any surprises that I need help with. Already scored a whole set of kitchen cabinets, brand new quartz counter top (measured and will fit my need), some small appliances, doors, and bathroom vanity from a coworker doing an insane home remodel for 500 bucks too.

ARV: 385k (first time doing comps but have followed my market in tacoma for 2 years before finally getting in and have some solid confidence given the improving area and a solid comp that just sold this week 4 doors down the road)

ARV available rent: 2k/month for home, and ~200/month for garage/parking rent out (to my dad who gave me the auto addiction and needs more garage space)

Given rents listed above, without doing a refi, the property nets -50/month (used BP rental analysis calc). definitely not ideal

However this is where i have questions: refi will give me the ability to assess the ARV on a conventional loan and possible do a cash out refi right? Allowing me to remove PMI but it will overall raise my monthly payments due to the loan being higher. Initial analysis shows that this would net me ~100/monthly cash flow but would still need to bank on getting cash out on the refi to get the next property rolling for my overall goal to move into Buy and Hold strategies both here and out of state. But is the wiser move to treat this like a live in flip and cash out to get the ball rolling at a faster rate with the next property? looking for some advice.

Newbie advice: If you are worried about getting in, let this be your sign to figure out what it takes to do this. I am nothing special. About 6 months ago I had a credit score of mid 500s and worked everyday to create a budget, follow it, pay off debt and improve that score to buy a house. My motivation was my gf and i were expecting a kid September, so I set a goal of moving into a place by July 1st. I am lucky enough to have a good W-2 job that i love but i need to get to FI so that i can enjoy time with my growing family. Find your motivation and push forward. Listen to podcasts, read books, follow REI people on social media, whatever it takes to put that in your face to get motivated.

In ending, looking for advice on future plans with the property. I'll be posting up my progression pics somehow (have to figure out how on here). Also, reach out if you have questions on my process or the short sale process, I am by no means all knowing on it but I can share my experience in hopes that it'll help you out. 

Thanks!

Raleigh