All Forum Posts by: Jane Z.

Hi,

Just got verbal acceptance of two offers and I thought it is good to first share my experience on my first two deals.

We have seen more than 100 single family homes before we started to submit offers, usually 20 to 25 homes in a row on Sunday, but it seems all the good rental properties were either gone before we even got the chance to place an offer or some else outbid us. Out of frustration, we submitted a high offer on one property. When we anxiously waited for the response of that offer, a fannie mae property we did not get the chance to submit an offer suddently went back on the market. We immediately asked our agent to submit an offer ($55000), which even took the listing agent by surprise because he called my agent to make sure we actually saw the property before we submitted the offer. We got the verbal acceptance in less than 2 days. The leasing agent we plan to hire already visited the property before and thought it could be rent out for at least $900 per month.

The next day when we were still excited about the deal, we got a call from our agent that a bid we placed on a HUD property two weeks ago was accepted. We placed a minimum net return bid ($70532) on that property and at the time was told another bid was selected . Even though we kept our bid as a backup bid, we almost forgot it completely. This property could be rent out for at least $950 per month. Both properties do not seem requiring major repair and are in good school districts. We still have not got any word back on our high bid offer. But we told our agent to resubmit a low offer on that one instead. I guess the offer does not alway need to go up.

Several time I felt so sorry for wasting our agent's time on the properties that we could not get. I am so glad that things turn out the way they are. At least our agent will get paid for what he did for us so far. But we will continue looking for more properties for sure.

So here comes to my question. We plan to do home inspection as soon as we get the contract in writing. I read that it is our responsiblity to turn on the utilities on HUD and Fannie Mae properties before the inspection and turn off 48 hours after the inspection. If we decide to keep the contract after the inspection, could we keep the utilities on without turning off? What is the consequence without turning off? It is just a waste of money to turn on, off, and on again. Thanks for your advice. I gain so much valuable information from people here.

Thank you all for your wondeful advice. I never thought I could learn so much in such a short period.

Aaron,

Thanks for your reply. When you say 4 mortgages, do you mean 4 mortgages at the same time? Assume we pay cash for two houses, could we still qualify for 4 mortgages? If the issue is that we could have more than 4 mortgages, just not at the same time, then I am ok. Also could my husband and I each qualify for 4 mortgages, so total 8 mortgages?

Joel,

Thanks for your advice. I will definitely keep that in mind.

Greg,

I live in North Fulton, which is very close to South Forsyth. I also know a little bit about Gwinnette. That is why I choose these three areas, all of them are not too far away from each other. May I ask why you are so surprised? J Scott seems mainly dealing with properties in Cobb, which I have least knowledge. But I am sure he knows other areas in Atlanta as well.

Questions???
We have seen almost 30 properties this afternoon and got a little excited. Here comes another question. We still prefer paying cash at this moment. But if we spend all of our cash and would like to buy more, what are our options? What are the disadvantages of those options vs getting a small mortgage for each property with smaller positive cash flow? Considering the home price is low, the mortgage amount will be small even with 100% financing. Will this affect interest rate? Does the additional closing cost justify this approach? My agent told us the interest rate will be higher for investors than owners even though we have perfect credit.

Greg,

Area 1 means North Fulton. Area 2 means South Forsyth. Area 3 means Norcross/Lawrenville in Gwinnette.

Aaron/Ellen,

I still would like to keep my day job. I don't mind working harder to make more money, but it is just not realistic at this moment unless I quit my current job.

Greg,

When I say appreiciation, I don't mean short-term appreciation. Obviously flipping houses is far beyond my capability. What I mean is less cash flow with more appreciation potential vs more cash flow with less appreciation potential in a long term period, such as 10 year.

This is the scenario. Area #1 is an established nice neighborhood with highest price. Area #2 has potential for high-paying job growth with middle level home price. Area #3 not so much in terms of job growth and home price, but close to major traffic. I originally pick area #1 as my target, however it is not very easy to reach 1% benchmark people talk about here. Area #2 is close to 1%. Area #3 has a potential to reach 1.5% benchmark. I am sure many of you may get a much better return with your experience and knowledge. But for a new investor like me, that is the most I could see myself getting. What I envision now is maybe buying several in area #3, then buying one in area #2, and forget about area #1. What do you all think?

Peter,

Thank you so much for your wise words. J Scott may be able to meet me some time next week. Hopefully I could learn enough before I jump into this business.

I don't have much a plan one month ago. Several conflicting strategies make me not so sure exactly what to do, such as cash flow vs appreciation. After reading more and more here and there, it seems like people on BP overwhemlingly favor cash flow over appreciation, which is exactly opposit of what I had in mind earlier. I remember one post mentioned that he would never buy a rental property he does not want to live in himself. That was my thinking originally. But the place I would like to live are much more expensive than those less desirable areas, which, according to numbers on paper, are good in terms of cash flow. I am so glad I adjust my plan before I take action.

Joel,

Thanks for your suggestion. But commerical real estate is too much a learning curve for me at this moment. I feel more comfortable building my knowledge with each small step.

J Scott,
Thank you so much for offering a chance to chat with you. I will send you an email later to follow up.

Gregory,
I know what you are saying. Actually if $80K is not that painful for me to part with, I have already jumped into the business now.

Raymond,
Thanks for the link. Actually I only learned this rule after reading some posts on BP, which is the reason why I will cancel our current offer. For me 1% to 1.5% is good enough. It is better than CD and less risky than stocks even though my stocks do perform well these days.

Thank you so much for both of your advice. Just to clarify, I did not mean to ask someone else to manage the investment for me. Based on my search, we should not spend more than $80K on our first property, which should then rent out at least $1000 per month, if we get location right. Only after the first one works out as expected, we then plan to buy the rest of them in the next 2 years to average out the price difference. The ones we are looking for are SFH, which will be held long-term (more than 10 years).

One thing I lack is confidence. I have never done or even thought about this before, even though the number looks good on paper. Maybe I should just do it and treat my first $80K as a learning experience.