All Forum Posts by: Chao Yi Shih

Hey @Chao Yi Shih It doesn't seem like a bad deal based on the info you provided. If it makes you feel better, I felt the same about the first two properties that I got especially since they were old and had a lot of problems (including bad tenants) and it worked out rather quickly. There were a lot of headaches but I still my first two properties that I bought in 2015 and very happy I held! I think you should be a bit more confident in the deal based on the rents and purchase price. Anyhow, you won't know 100% how good the deal was till a couple years after. It might look amazing in a couple of years.

 Look at the rentals that are comparable and base the rent off of those numbers.  Remember all you need is one good applicant.

@Travis Timmons crushed it with his response.  I feel the same as he does.

Here's what helps me in those situations...figure out the plan if things don't go according to plan.  No shortcuts here and you need to largely be in control and able to execute.  Ex: waiting for rates to come down and refi can be included in your list of plans but you don't control this.

Think along the lines of move in and turn into a primary, sell off a property, 401K loan, pick up an extra job, etc...

Out of all the deals I have done, maybe only 1% I would say was a slamdunk and I saw there was no way to lose no matter what (i.e. somebody just handed a piece of real estate to me and only wanted pennies on the dollar) 

99% of the deals, none of them looked like a slamdunk in the moment. Some of them maybe was just little breaking even. But years later down the road, after we stabilized the properties and operated them for a long time, all of them become a slamdunk deal after 5 or 10 years. Even for the ones that somehow we missed the mark and it was "bad" deal in year one, but we continued hold on to it and operate it and made it green. 

The key is: simply don't get killed in this game. The longer you play, the better you become. And the real estate game is very forgiving. If your renovation cost ended up being higher than you budgeted, then elbow to the grease and you better pick up a paint brush. If your operating cost is high for your LTR, spend some time in the evening to learn how to manage properties on your own and start manage your own properties (trust me, it's not rocket science, professional PMs here will criticize me on this comment).

This deal you mentioned does not seem like it's a deal that will get you killed (financially speaking). So I'd take it and run with it. You will have lots of experience and knowledge from owning this unit. Whether good or bad, at least in the future, you see a similar deal, now you know better what to do or what not to do. 

Buyers regret (or getting under contract regret) is not uncommon. This deal doesn't sound like a slam dunk and the fact no one else bought it at $224k is concerning (although we've been the only offer on really good MLS deals before, so it doesn't necessarily mean it's bad).

It may not be a slam dunk, but it sounds like it will be a solid rental. From what I've seen, I don't think it's worth backing out and losing your $10,000 deposit. That being said, going forward I wouldn't wave the inspection period unless there were other offers or you knew for sure it was a killer deal. 

@Chao Yi Shih hi my main concern here is that if you didn’t get a real inspection it sounds like you don’t plan to get insurance on it. A contractor can help yes when it comes to looking at it and telling you how much or what you be looking at if you want to upgrade or fix something visible but you need the inspector to check out the roof AC and plumbing thoroughly despite what it looks like in person I’ve seen mini jacked up ceilings. Just get painted to make an old roof look fresh.

Always keep in mind when buying a property without an inspection that if you go to sell it the buyer at that point more than likely will do an inspection, especially if they’re using a realtor. This means more negotiation against you. Should you decide to get out.

Nonetheless, though, if the numbers initially look good, and you haven’t closed yet, not still do an inspection. You may not be able to back out of contract to save your escrow deposit and I’m no lawyer, but if you’re doing inspection and it’s totally jacked up and it can potentially clean out your account and portfolio. Maybe you would rather lose the deposit, then get into a lifelong bad deal.

Just double check the numbers and if you can do a real inspection with a license inspector it’s worth a couple hundred to not put yourself at risk of losing thousands. 👌🏾

I've bought a total of 8 houses in my life, while I can't touch many on BP, that's a lot to me...mix of primary residences as live in flips, normal primary, and 4 investments. I've not felt good at closing on any of them. I get that nervous feeling and my chest hurts as if I'm making a huge mistake or overpaying. That is normal. If it is truly a bad deal, that's a different story; I can't answer that for you.

Reality is that if you are a long term buy and hold investor, your purchase price really doesn't matter that much. We obsess about sourcing great deals and making money on the buy, but time beats everything. If it is an asset that you want to own 5-10 years from now, take a breath and feel good about your purchase. The first year is always tight. Find a way to pick up some extra income to get your emergency fund back to that $30k. 

You had an inspection that should have uncovered the aging shingles.  It is normal to have second thoughts, but if the numbers work; I'd go through with it.  

As Steve said 'better to hit a safe double than a strikeout looking for a home run'.  We all learn as we go and when it comes time to purchase your next rental, apply what you learned from buying this one.

Also if the rents are that much below market, I'm not sure why you wouldn't rent the front unit at market value. For the back unit, increase it a bit once the lease is up (eg $50 a month).  On the one hand you're worried about costs, but you have opportunity to get more money and aren't doing it.  $50 a month is $600 a year and if the rear unit is $170-270 below market, you're leaving that on the table.  With a long term tenant who takes good care of the place, I'd still raise the rent a bit.  Again for the front unit, if market value is $1600-1700, why rent it for less than that?  You're losing up to $200 a month (on the high end) or $50 on the low end, again another $2400-$600 a year.

@Chao Yi Shih I think it's a sound purchase. Even though you MAY have been able to get it a few grand cheaper, you also may have missed it entirely.  A few grand won't really change anything in the long run.  Better to hit a safe double than strike out looking for a home run. 

 I've never done a dscr loan but if rates drop after your (most likely) pre-payment penalty ends, I'd refi. That will help the cf and I think your in at a good price.  We'll done.