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Updated over 9 years ago, 07/08/2015
1st Step Felt Easier than the Second
My first deal was to be owner occupied in a condo. This condo is downtown, one block from the main drag, with a peek-a-boo view of the harbor. I bought it off the MLS as a foreclosure and it was terribly ugly inside. Gold fixtures with a dark green carpet that was destroyed. The paint was still from the 80s. The bathroom had components added that made it look like a hospital. The large, metal hand rails were terrible and the bath surround was about to fall off the wall. There was drywall damage in an odd corner of the bathroom above the washer and dryer.
My goal was to purchase and live in it while I work on it. I had one year to fulfill the VA requirements. I began the work needed to update the condo right away. We finally finished with painting and flooring at 11 months of the year requirement. I was already searching for another proper to use my VA entitlements on. The market here doesn't allow for purchase above any median price and still cash flow for rent. I had a decent idea what I could get after renting in the area for six years myself. So after a year of updates including carpet, bathroom, and electrical upgrades, I am ready to move out.
I finally met a realtor that knows what I want to know. She is an active commercial and residential investor in this area. She also has experience across the US and has been in the real estate investment business since she was very young. Together we have written enough offers that I was ready to stop looking in this area. Then we found a property on the MLS that was listed in a community that is very popular in the area. We are currently negotiating repairs for the roof right now, but it seems that the year of work to my condo has really paid off for the rental or resale market. Although, finding this second property has been a very tough challenge.
My criteria is pretty strict. Sometimes I wonder if I am being to strict. I am still new so I don't want to break my own rules until I know what will work for me and what won't.
Ultimately, thank you Bigger Pockets and all of its members for the supportive comments and discussions made available to give me the confidence to continue pursuing my dream.
@Tyler Kaye congrats on the first place. I believe your patience will pay off. Plus, you are lucky to have found an important member of your team who sounds like a perfect fit. Keep persevering! If after another few months nothing has come up maybe you can look into other non mls methods of finding properties that still meet you criteria.
Mind me asking what your current criteria are?
I've only got a few deals under my belt, but I'm a firm believer that setting and sticking to rigid criteria is one of the most important things you can do, especially in the beginning stages of an investment career.
Originally posted by @Corey Westermann:
Mind me asking what your current criteria are?
I've only got a few deals under my belt, but I'm a firm believer that setting and sticking to rigid criteria is one of the most important things you can do, especially in the beginning stages of an investment career.
The criteria initially is meet some long term goals. The property has to cash flow at current rent rates and can fall into acceptable terms by the VA. Their appraisal standards are a little different and you have to occupy the premises for a minimum of one year. Also, I have my own version of an investment calculator that calculates information based on my needs and wants. Initial cash flow may be low, but I will only consider those properties if they are in a community that I know is appealing to the local population. It has really helped me to be living in the same area for the last eight years even though I am active duty military. It is easy for me to just look at numbers and once that makes sense, then I move on the external factors: value add options, local market, rental capacity for the community, growth and development, and local availability/stability.
This is one of the hottest markets on record all across the US. You are competing with other investors who may not have any sense, and owner occupants who can afford to pay a little more because they aren't trying to make money from it in 6 months.
Deals are hard to find almost anywhere. Most properties you look at aren't going to be a good deal. As long as your criteria are even remotely realistic, you should stick to your guns and keep looking. Talk to your agent and make sure you have realistic expectations.
I think you're doing fine! You've made a conscious decision to proceed slowly and carefully, and that will pay off for you in the long run. As the market tightens you may find it harder to meet your criteria, but unless you're being really unreasonable (and your agent will tell you, if you are) then you're probably wise to stick to your guns. Making methodical use of those VA benefits is a great strategy.