Bought at $525k. Just appraised at $790k!!

[George Tiglianidis]

Hello BP Family,

For a year now I have been reading books from the awesome BP authors and hosts of the BiggerPockets Real estate Podcast (Josh, Brandon and David) wondering how I could start my journey.

Well, my journey took me to my neighborhood and specifically two streets away from my home. My wife and I always walk around the neighborhood and had passed by this grand colonial house hundreds of times. Never paid attention to it because it never stood out (overgrown shrubs and trees blocked the entire house).

One summer night after walking by the house we noticed that it had been for sale for months and so “for fun” I called the broker on the sign. It was Sunday night and I thought “She won’t answer and I’ll forget about it in the morning”. Well she did answer and asked me if I wanted to see it. We scheduled an appointment the following day and with my contractor we looked at the house from top to bottom.

We decided to put in an offer. When the house originally went up for sale the seller was asking $680k and by now it was lowered to $580k. With my buyers agent we offered a low offer of $515k (because we had nothing to lose) and after some back and forth we got it for $525k and no inspection (risky but we knew the house was a guy job). We could not believe that we got this 6 bedroom 1.5 bathroom house for that price.

So now we have an agreed upon price and after interviewing 3 brokers to sell or rent our current house we decided to use our HELOC as a down payment and sell our home with the same agent we used as the buyers agent for the new home but only if she lowered her rate. She lowered it by 1%.

Our home was put on the market for $629k and before we made it to open house we had 2 private showings and multiple offers came in and we agreed on the best offer of $640k and a flexible closing (because we’d be rehabbing the new home).

The rehab went over budget and longer than expected and while we did agree to a flexible closing, (we did extend 3 extra weeks) we could not afford to hold 2 mortgages much longer so decided we had move out.

Moving day came and we moved out of our home and some furniture went into the finished rooms and the rest went into a POD.

Where did we go? My wife and I slept at my parents house the next town over and my kids at my brothers’ house because it was down the street from their school. This living situation lasted 3 weeks and between Thanksgiving and Christmas we finally moved in!

Now that we were down to 1 mortgage we could breath again but we needed to get rid of PMI and so the mortgage company sent an appraiser and the appraisal came back at $790k!

Now we are in the process of getting a HELOC so we can buy a rental but what a learning process!

Here are the numbers:

Old house mortgage was $420k.

Sold Old House for $640k.

New House purchased for $525k.

Rehab costed $125k which brought us all in at $650k.

Appraisal came in at $790k.

Our HELOC looks like it's going to come in at $137k ($790K*.8=$632K. $632K being the total of both mortgages and HELOC. $632K-$495K (which is our new mortgage) = $137k HELOC.