All Forum Posts by: Benjamin Baellow

Thanks for all of the advice.  I will hire professionals next time.  By the way, the new family I moved into one of my rentals cleans houses / apartments for a living.  They did all the cleaning at move-in and I just deducted from rent.  I will most likely pay them to clean it on the way out if relations remain good.  

Scott Harper: The first home was purchased as my residence, and I used the VA loan with no money down. I had roommates paying the rent and I eventually refinanced to get the mortgage to $700 and I get $1400 a month rent on that one. The second home I did not put down the full 20%. I paid about 15% and paid PMI upfront. The mortgage on that home is $590 and I get $950 a month.

Here are some pics of the new house I just purchased.  

I guess I should start from the beginning. I bought my first home with a VA loan and no money down. I lived there, but my intention was to have roommates that paid the mortgage. For two years I lived in that home with two roommates at a time. I rented two rooms from $550 to $600 a month each, and the mortgage on the home was just over $700. This was a 4bd 2bath with a finished basement, and I lived in the finished basement.

The plan was that the next property I bought would be a full investment property. However, sometimes life throws a curve at our plans. I started dating a lovely woman, got engaged, and realized I needed a home for us. That, along with paying for the wedding, set my plans back two years.

Late last year I found a small 700sq ft home in Waldo, which is a good area of KC. The home was bank owned. From the inside I could tell it had been recently flipped (new kitchen, bathroom, windows). The bank wanted $110k. I told my realtor to put in a bid for $93k, which they rejected. I thought I had lost the home, but a few weeks later the bank came back with a second offer. I asked my realtor how much they were asking for, and he said it was the same $110k. I told him to give them an offer of $96k half hoping they wouldn’t except, because that would drain all my savings for the down payment. To my surprise, they said yes immediately.

The home closed in October. I planned to have it rented in by November. I got a tenant approved, deposit was paid, and all looked good. The same evening I got the deposit the tenant ended up in the hospital and called to back out. I of course let her, but I had spent a good deal of time approving her and getting papers signed, so now I was already paying first month’s mortgage. At the same time, the tenants in my other rental gave me 30 days notice that they were leaving. Oh, and I found out that my wife was pregnant…with twins.

I quickly put up adds for both homes, and contacted my realtor who volunteered to advertise the rental to all his fellow agents free of cost. Long story short, I now have both homes rented. The first home still has a $700 mortgage, and I get $1400 a month in rent. The second has a $590 a month mortgage, and I get $950 a month rent (I could have got more around April or May, but I was stuck looking for a tenant in December).

Time to start saving for the next deal. 

It is very easy for your real estate agent to put in a HUD offer, so on that side it couldn't hurt to first throw out a low ball offer. It is hard to say what is a good offer not knowing any comps or the neighborhood. Also, it is a tricky assumption that the only work needed would be cosmetic. This house has been sitting for many months, it sounds like. Owned by HUD with water shut off for that long can do bad things to pipes. That being said, with HUD, they have some number they want to reach on their books. Shoot them your offer, and they'll shoot you a counter offer. If your agent is good he can probably figure out what amount they need just from the counter offer. The real question isn't even if it is a good price, but if you can make a good profit renting it at that price. Look at what similar homes of that size are renting for in the neighborhood.

I was able to put down 15% on a single family investment property, but had to pay PMI. In this case I paid a lump sum to get rid of the PMI up front at the closing which saved a ton of money in the long run.

Simple question;  When tenants move out do you always hire a professional carpet cleaning company, or is it cost saving to do it yourself?  Is the work worth the time you save?