Patience pays off!

[Mariah Jeffery]

I bought my first renal property in March '06. Despite the hot RE market, I found a motivated seller and still got a good deal. I was excited to buy more properties, but didn't find any that would give me an acceptable return in Sept. '09. At that time, I found a motivated seller who sold me 4 properties, one per month for the next 4 months. Then I found some properties on the MLS, made 8 very lowball offers (about 70% of asking), got them all rejected. A month or so later, my agent told me the sellers had reconsidered and decided to take my offer for $155K on a 5-plex with a tax-assessed value of $190K. Another month later, the seller of a single family home decided to take my offer. The last property I purchased was in March '10.

At this point I had bought 7 properties in 8 months. I thought I was on a roll and was hungry for more. But there was simply nothing good, or I got outbid. Investors started going crazy over REOs in this area and bid sometimes 20% over asking price. I put in at least 15 offers and all were rejected.

I became so discouraged that I talked to my husband about either a) giving up on RE and investing our available cash in the stock market or b) settling for a lesser return than we had in the past. He told me to give it 6 more months before doing either.

Last week, I noticed a package of 4 single families (2 four-bedrooms and 2 three-bedrooms) come on the market for $211K. The combined tax assessed value is $310K. Two of the homes were rented at $800 and $950, and the other two need work (carpet, paint, and shingles). The seller was having cash flow problems and wanted to sell ASAP.

I offered $184K, and the seller accepted without a counter. I was blown away. These units will bring in $3,500/month in rent and will cost only about $10K to rehab. They're in a very nice area of town (unlike all of my other rentals) and should bring good quality tenants. I'll have great cash flow and built in equity.

On top of that, the seller has two more homes not yet listed on the market. She's agreed to allow me to view the properties and make an offer before listing them. If I'm lucky, maybe I'll end up with all 6.

Lesson learned: patience and persistence pays off. Determine what your minimum return is and don't settle for anything less.

[Mariah Jeffery]

Originally posted by Curt Davis:

Mariah, do you pay all cash for these homes you have been purchasing or do you get conventional financing? Nice work!!

Nope, we put 20-20% down and we use either Fannie loans if no repairs are required or our local credit union if they are. We get 6.75%/15 years fixed through our local credit union. Not a great rate, but they'll finance anything for us as long as the price is under the tax assessed value, without even an appraisal.