Low Income Properties Diary

[Andrew Martel]

So over the past 4 months I have been working on my first 3 low-income rental deals.  Here's how it's going so far. 

Deal 1-

33K 3Bed 1Bath 1300SqFt

I found this property through my realtor.  It had just popped up on the market and compared to the homes around it, it was a beauty.  There are a few problems with it... mainly that it is outdated - The home was built in 1930 and has no AC, windows are cracked and old, the light fixtures were barely there and the floors (hardwood and linoleum) were a mess.

Now it's essential that I mention that this is an out of state purchase. I live in Texas and the home is in Virginia. All my previous homes have been purchased in the state that I was living... So this I know will be a challenge.

Through a bit of shopping I found a contractor and got an estimate. I was looking at around 25K to rehab the home. This is money I did not have. So I went searching for a loan. Come to find out, most HML's don't want to do anything under 60K, so I went to the bank. There is only one loan that I could find that would suit my situation- the Fannie/Fred Homestyle Loan. This is very similar to the 203K loan, but it is for investors and has a lot less restrictions. I managed to find a bank that could get me the loan so long as it came to 46K total money lended. Perfect! I managed to get the seller to agree to 33K sell price, with 25K in rehab that puts me around 58K... I'm golden.

Closing took over 70 days. The underwriter we worked with was atrocious. I have never provided so much paperwork to a bank... ever. Ridiculous stuff too, like a letter from my squadron commander stating that I would be receiving my Basic Allowance for Housing for the next 3 years.... huh? We closed none the less. Now we're on to the rehab portion.

Rehab started last Friday and I must say, for rolling the dice on this contractor, he's impressed me so far. For me a big factor influencing my decision on who does my contract work is how well they communicate. This dude OVERcommunicates, and I love it! I've been informed of every item and he replies within an hour tops.  So far so good, we'll see how it goes as we progress further.

I have a lot more to write about this and the other properties but I'm being pulled away. I will continue later on!