All Forum Posts by: Chris DeHaan

Closed on the house this morning...I'm officially a landlord! Seller took care of a list of inspection items for me and I've engaged a property management group to start marketing the house for rent. They think we may be able to get more in rent than I was originally projecting. Gotta like buying into an ascending market!

Thanks to everyone for the encouraging words. I've just booked my flight for next weekend to physically inspect the property prior to the end of the inspection period. Looking forward to seeing it in person!

When do you first fly out to inspect your new purchase?

I'm under contract on a property in Colorado, and have a two week inspection period. I'm hiring a local home inspector to do the usual due diligence inspection, but would also like to see the house myself. Considering that it is President's Day weekend airline fares are about double what they normally are, but I feel uncomfortable letting my inspection contingency run out without having ever seen the property in person. It also makes a lot of sense to fly out the weekend of closing (which is on a Friday) to clean up any areas that still need touching up, install the new appliances, and show the house to potential tenants. But two flights out in one month adds up quick!

What do you other out-of-towners do?

Yep, that's the deal @Mark Ferguson @Mark Ferguson

@Mark Ferguson

After many years of watching from the sidelines and suffering from analysis paralysis, I'm happy to say that I've finally taken the next step! I'm under contract on my first property after a couple days of negotiations with the agent.

The property is a 3bed/2ba 1940's bungalow on a corner lot in Greeley, CO. I am on the mailing lists for a number of agents in town, and contacted the listing agent within hours of receiving the email blast. The listing price was $99,900; I offered $95,000, and was countered at $97,500. The property was priced well from the get-go, so I did not expect them to come down in price much. I will not claim that this is 20% under market, but it's a fair price. I intend to own and rent out the property on my own for the long term.

I live in CA, so this will be a long-distance investment for me. I chose this area because I grew up in the Denver suburbs and still have family in the area (in case urgent issues come up).

Sale Price: $97,500 (20% down)

Rent: $950/mo (hoping for $1,000)

PITI: $477/mo (mortgage payment is $406)

Taxes: $585/yr (projected)

40% rule puts me at about $160/mo. 50% rule puts me at less than $100. So, for now I will attempt to self-manage. Being a college town with a strong oil/gas industry presence, I expect rents to remain stable and/or even increase over time.

The sellers recently replaced all the windows with dual pane vinyl units. The cabinets and appliances were replaced one year ago with basic "builder grade" units. The roof and exterior paint are about five years old and the interior of the house was re-painted this week. The furnace is older but was serviced this month. Don't know much about the water heater.

My primary goal with this rental is to finally get off the sidelines and start getting some experience. Depending on how this goes, I will continue to buy more in the area or come up with a new plan. I know it is not the most exciting deal out there, but it is a foot in the door for me.

My biggest lesson learned thus far was allowing the listing agent to double-end the deal. I thought it would give me an advantage over the other bidders, which proved to be true. He held other agents from viewing the property until the sellers and I finished negotiating. He's been easy to work with and very accommodating, but all that being said I don't necessarily trust that he's getting me the best deal possible. I may choose to do things differently next time.

I would appreciate insights and words of advice from everyone out there!

Thanks for the input @Ellis San Jose I'm working on putting a proforma together right now to make sure the numbers work as a pure investment property first. I would consider the benefits of moving into it later on once the property is stabilized and financing is settled. I'm not sure how feasible this is....but I was thinking of using hard money so that I could make a "cash" offer to help give me leverage in the bidding negotiations. Using the hard money as a bridge, I would refinance with a traditional loan once escrow is closed. I know hard money is expensive. Is this done often?

@Account Closed Boy, I wish we could! We are hoping to use traditional financing since we don't have the funds to pay cash for the property. We have enough for a 20% downpayment and I think we could easily qualify for the loan since we are both in salaried positions. Should we consider hard money as a viable option instead?

Hi Everyone,

My good friend and I have been looking to buy a house together for the past couple of months. We are located in the SF Bay Area where average homes regularly sell for over $1M, thus the desire the purchase together. I stumbled upon a multi-unit building in a desirable area of the city this weekend, and I am hoping to get some advice about how to go about making on offer:

The property in question has three units: a 2bd/2ba on the first floor, a 3bd/1ba on the second floor, and an unwarranted 1bd unit on the top floor/attic. All three of the property's units are currently leased for a total of $6700/month. Similar units comp at $3800-4000/mo for the 2bd/2ba, $4500-5000, and $2000 for the 1bd. The rental market here is extremely hot right now and I don't expect much rents to increase much from where they are now.

The building is listed at $999k and will need some updating. The seller's agent sent me the disclosures today and said that it will need some work based on a property inspection that they had performed. If the third unit was warranted, it would compare to similar buildings selling for $1.5M-2.0M.

Our plan would be to operate the building as a buy-and-hold until we could get the current tenants to move out of the 2bd/2ba unit. Then, we would live in the 2bd unit and rent the other units out to cover as much of the mortgage as possible.

1) We aren't currently working with a buyer's agent. Should we involve another realtor to make an offer?

2) By buying together (with some sort of a TIC agreement?) would we lose the ability to claim a mortgage interest deduction on our taxes?

3) I expect fierce competition on this property based on its below market listing price. Should we go in and offer above asking right off the bat?

Any and all advice is greatly appreciated!

Thanks for the input Bill Gulley. I'm looking to get a loan for a buy and hold investment, rather than my own personal home, so that limits my options, right? Even with 20% down, I've been told that many conventional lenders won't even entertain a loan for an investment property.

Karen Margrave Can you post the link to your blog on development? I'd be interested in reading it.