My House Hack Journey: Detroit Edition 1st Update

[Desreal Shorts]

Hello and welcome back to my house hack adventure. If you are new I suggest to first read the first post; My House Hack Journey: Detroit Edition. If you are following up, as a reminder we left of with obtaining a pre-approval letter. 

As I have stated before, your agent is going to need to know what you can afford, as will you. After doing my shopping around I managed to obtain 2 pre-approval letters. The first was for a FHA loan for $108,000. Not too bad for Detroit; enough to work with. The second was a VA loan for $150,000; plenty of wiggle room. Both had an interest rate of 3.5% and I was happy with the numbers; So I went shopping.

There were a lot of homes on the market and I did not have time to see them all. But I took this as an opportunity to learn a new skill along the way. I decided to practice analyzing deals for rental properties since I decided this first property would eventually graduate to simply a rental, rather than a live-in rental. I accomplished this with the Bigger Pockets Rental Calculator. It is a great tool that can break down many of the expenses you can expect to incur and can give you a good idea of the profit margin you could possibly receive, or not if the property is a bust. It is a great tool, easy to use and has unlimited uses for Pro members (I swear they’re not paying me to say this). 

After analyzing a substantial number of properties, I picked the ones that would give me the best potential for cash flow. Now, I will pause here to say that I do recognize that some people do invest for appreciation, but I do not believe I am skilled enough to try to assume the market based off of MY experience. Also, I am a young investor and there does seem to be something very appealing about the idea of building reserves for a rainy day, in light of current situations. 

HOUSE HUNTING DAY!!!

Here is the main thing to remember for this day; WEAR COMFORTABLE SHOES! We all like to show out a little, I get it, but you’re going to be walking in and out of homes on some questionable surfaces. Also, BRING A PEN! You’re going to want to take notes. I know you think you have a good memory, but better safe than sorry. You don’t want to get the basement you loved in one house confused with the kitchen you hated in another ( I don’t know if that makes sense). 

At first I will admit that house hunting was exciting but I did not find anything that made me want to bite. But this is where a little secret I picked up came in handy (it’s probably not a secret. You probably already do this). I have notifications sent to me from Redfin tracking available 3/2 Single family homes in a set area. There are a number of sites you can do this with, such as zillow and realtor. 

But there I was up for some reason at 1:00 a.m. I received a notification on my phone and decide to take a look. Sometimes I see those Redfin notifications and I push them aside for later, but this time I decide to open the message. There was this 3/2 bungalow that was just remodeled for 99.5K. Definitely in my budget, on the right side of town, and after putting it into the BP rental calculator it was a win. So I sent my realtor a message and she had us in the home early that afternoon.

I made a little mistake, I started to fall in love with the property. I was told not to do that. But after doing a walk through I decided that it was very well done flip. At this time it has been very hard to get good properties under contract. The bidding wars were getting intense, so we decided to go in with a strong offer (or what I believed to be strong). I offered 100k with 1500 earnest money, with concessions on the closing cost and blah, blah, blah. I did not expect them to respond so soon as this was over a holiday weekend, but money doesn't sleep. To my offer they countered with 104k and they would pay all closing cost, but I could not use a VA loan (This part was a stipulation before I put in the first offer).

Now, I do not know what they have against VA loans but this was a perfect example of why it is important to shop around for your loans. Because I did not rely on the VA loans no money down policy I was able to build reserves. Because of those reserves I was able to qualify the FHA loan which I decided to apply for when I accepted their counter offer.

So I have a house under contract, now what? WElP, I hired a contractor to take a good look-see around the house. Based on my readings, it is always recommended to get an inspection on a home. Typically you go through an inspection period which is dictated in the contract. He sent me an invoice of which I provided to my realtor, which she will use to work her beautiful magic again. 

And now, we wait. I will continue to keep you posted on my house hack journey. Continue working towards your goals and allow us to continue to motivate each other.

Also, if you have any advice or information that can help me or anyone reading this on our journey please share your thoughts with us.