1st and foremost, I'd like to thank everyone on this site for helping me feel confident in my real estate dreams. While I'm technically a newbie, I've been reviewing the BP site since a family member told me about it while I was in High School (which was been quite some time).
Fast Forward 10years, and I'm now grown with my own kids but my passion for real estate has always been there. With the knowledge and tools from the site, and meeting some of the right people here in the MD area I decided that now was the time to do it. While I can pretty much write a book over what I've learned (and did wrong), I wouldn't change anything!!!!
I searched properties for nearly (2) months looking for a certain type of property. I wanted a property in a descent area of Baltimore City that was solid and needed only cosmetic work mainly. Once day after talking with a fellow Real Estate neighbor, he told me that he just received an auction that he attends and forwarded me the info late that night. I looked over the list and one stood out because it was in an area that I was familiar with. That morning I woke up, it had been thunder storming and my colleague sent me a text saying that he wasn't able to attend with me as we discussed. At that point, I almost said screw it but after thinking I decided to go check it out anyway.
The Auction
After picking up a certified check, I felt like I was in an episode of Flip or Flop. I arrived to the home and showed my check to auction personnel and there was only ONE other bidder. I began to look in the basement for water leaks, working my way up to each level of the home checking for signs of leaks, cracks foundation issues etc. Based on my knowledge from this site, reading, and (unfortunately t.v shows), I felt as if I had a good enough idea on the needed improvements. As time went on additional bidders began to show. I can remember one particular guy pull up in a nice big Mercedes, full suit and leather shoes, and I thought to myself....DAMN i'm not going to win this bid. We all huddled up in the living room on a cold rainy day and bidding commenced. Starting at 25K, working its way up to the high 40's. In my mind, my MAX bid was no more than $50k (which by the way....I have NO cash at the moment. Just a line of credit for $30k). The man in the suit bid $49k, going once.....going TWICE....I nod my head to take it to $50k. Just when my blood is flowing and I'm feeling an adrenaline rush, another bidder bids 51K. Going ONCE.....Going TWICE......SOLD to the other bidder....Right??? NO!!!! The auctioneer states that unfortunately he is unable to sell for that price as apparently there was a reserve on the property. While everyone is rushing off to get to other auctions that afternoon, I see the auctioneer speaking to another gentleman. I walk over and hear the auctioneer say that he would be willing to go back and speak with the Bank/owner of the property if anyone wanted to make an offer. He hands me his card and says that whoever gets back to him would have the 1st shot. Now, as you've read earlier in this post, I literally had NO cash. However, I was speaking for weeks to a very close friend of mine who is a professional athlete and mentioned that he would support if needed. Before the auctioneer locked up, I took a few pictures and called who I call my "Baltimore Expert" to see if the area was worth more than $50k. He stated that the particular area could be easily rented and is in one of the better parts of Baltimore city, and based on the improvements needed it would be a good deal. I then called my friend to run it past him, explained my plan/goal and even worked some numbers on the new BP rental calculator printed out the PDF with the numbers and received his commitment. (Thanks BP, I really think that his financial advisor was impressed with the PDF report as he was uneasy about investing in Baltimore vs our home state). So, after a little back and forth, the contract price was set at $56k. I projected 12k in rehab costs and planned on being done and on the rental market within 1.5 months tops.
Shortcomings:
In hindsight, I think I overpaid slightly for the home but I think that I got a good deal. If anything, the perfect price would have been between $51-$53k.
Under estimated Settlement Costs which came in at $2,800.
Rehab Costs...total rehab came in at just under $19k. (Not including appliances. And the time frame took much longer than expected.
Also- I was stuck with a huge water bill!!!!!!!
All in all, I am pleased with the results. The quality of work is great, and as of May it is occupied and took less than 2 weeks.
I've learned so much from this experience and finally being able to live my dream is so rewarding. Someone once told me that the 1st one is always the hardest, if that's true...I cant wait to move on to the 2nd!!!!
