Terminated contract due to inspection report

[Bryce Renicker]

Hey BP community,

Just looking for a little insight / encouragement after my first deal fell through. Im in Chicago, looking to purchase a 2 flat in the Pilsen area. 

I had a 2 flat under contract at 360K with a 3.5% down FHA financing (approved for up to 400K.) I got cold feet after the inspection revealed issues in the bottom unit including the 2 gas space heaters not functioning (going into winter), the flooring caving into a sinkhole in the kitchen without the ability to determine cause, and all the drains outside leading to the sewer were collapsed causing fear of flooding. (the bottom unit is set below the street level although still open all the way around so not a true garden unit). These were the biggest issues on a long list of others including many of the appliances not working and mechanicals way past their lifespan. My real estate agent basically telling me that at that price range anything I find is going to be very distressed and I need to come in with cash reserves to do a lot of rehab. Unfortunately I was trying to house hack my way into real estate with minimal cash reserve. Am I just trying to get in too soon ? Is the Chicago market just really that tough? I plan to keep looking, fighting the urge now to give up and go back to renting for another year.

[Joe Splitrock]

@Bryce Renicker based on what you are saying, it was probably a good choice to terminate. I am a fan of buying properties that are not distressed. I can quickly rent them out without added expenses. The cost of material is escalating and it is getting harder to find labor. Look for a better property, even if you need to spend a few bucks more.