Better late than never

[Ken Virzi]

Hello, I am from Los Angeles, lived overseas for 7 years and then moved home and was looking for a good deal for me to actually own my first property. I knew what I could afford and wasn't looking to invest but to actually just get a property. I was tired of all the booms and busts of the stock market and I wanted to have a property that would be there even it dropped it price. I wanted the certainty of owning something instead of a piece of paper.

I knew what areas I could afford and that were tolerable to buy. I found a couple gems of neighborhoods that surprised my agent, and we definitely looked at a lot of random properties. I eventually made an offer on a nice condo but did not get it. I then settled on making an offer on two different condos in a different city. One said no and the other said yes. One thing that was appealing to me was that there was a section 8 tenant in there and the rent was high enough to cover the mortgage and HOAs and then some. I kept thinking I couldn't lose because the numbers were so good. My mortgage would have been less what I could have got for rent. The complex and area wasn't the best, but I would be 7 miles from Manhattan Beach and share the same weather with those $3 million houses. 

Well, I ended up getting a new job that took me to other side of the country and so I never actually moved into the place. The section 8 tenant has been in there the whole time and I have raised the rent slightly since taking over. This was a little over a year ago. I became an accidental landlord but there was a part of me that was more than happy to let that tenant keep paying off my condo for me.

I am a natural saver and after clearing out all my money for the downpayment a year ago I found myself with a good chunk of cash again. I started thinking about investment property and as I was doing research I found BP. It didn't take long to dive in, listening to the podcast like crazy, reading up about certain areas, and even calling a few guys from the site to pick their brains. 

I recently found my first deal through the marketplace and one of the guys I had talked with on the phone prior (thanks Jorge). At the same time I found another duplex in the same neighborhood that had good numbers too and so I made an offer. I am in the process of getting my loan for the second place, and waiting to sign some papers with the first deal. If everything works out I will have 5 units in Ohio and my original unit in LA. These two new purchases will wipe me out, but my goal is to start saving again and hopefully get a couple more in another year.

I am bit addicted and see myself expanding my portfolio annually. The only thing slowing me down is my cash is gone. Hopefully once I prove myself and grow my network other options such as partnerships will start to come to fruition. 

I am happy to have found BP and hope to be a part of this community to become one of those guys that newbies call just like I have done already myself with some of you. 

[Michael Swan]

Hi @Ken Virzi

I just replaced a roof on one of my single family and that was expensive.  That duplex is in Euclid, OH. and you need to replace big ticket items occasionally.  At one small 8 unit apartment complex in Shaker Heights 1/2 the roof blew off in the winter of 2015 5 months after I purchased it.  Even with deductible I was knuckle and dimed to a tune of $12,000 out of pocket.  I had a $5,000.00 deductible.  Mechancal weathering occurs a lot in NE Ohio and the city will come by and tell you to replace the driveway, sidewalk squares etc...  Water heater, Electrical, furnace, AC, etc....  One of my single family in Euclid had a problem with raw sewage during heavy rains mixing with the rain water and filling the basement with over 12 inches of that disgusting stuff.  Tenants get divorced, lose their jobs, claim bankruptcy, get sick, etc...

People often say that is a bit much, $10,000.00 a door.  As I said, I like better to be safe than sorry.  Don't buy anymore RE until you have adequate reserves for your family and each rental property.

Take my advice or leave it.  I sleep well knowing I have enough reserves for when, not if Murphy's law rears its ugly head. 

To be forewarned is to be forearmed!!!

Swanny