I am currently an unemployed college student, trying to purchase my first rental property.
Today I went to view a property that is listed at 33k. I have enough money for the down payment, and enough left over for any major repairs (currently there are none). The viewing went pretty poorly considering my lack of knowledge in the real estate business. In the viewing of the property it was me, the seller, and the promoter (mediator of the deal who takes a commission for making the deal happen) of the property. I talked with the promoter before the seller got there and made him aware that this was my first "real estate deal". The seller was made known of this fact as well, which in combination with my age (20) seemed to turn them off.
During the viewing, the questions I asked and the answers I received included:
1. Why is the seller selling? (Doesn't have the time to manage the property any longer)
2. How much is the tenant paying per month and do the tenants pay the utilities? ($550 and yes)
3. Do the tenants cut the grass? (Yes)
4. How long has the tenant been living in the property and do they always pay rent? (Just under a year and yes)
5. Are there any major repairs to be done on the property?(no)
6. Is the roofing leak free? (Yes and I didn't see any leaks)
7. Is the floor water damaged? (No and I didn't see any floor issues)
8. Has there been any criminal activity in the home or done to the home? (No)
What other questions should I have asked?
After the viewing, the seller stated that he would need me to pay the property taxes and closing. (Excuse my ignorance, but I do not know much about property tax and was not fully sure what the seller meant when he said this. I am also not sure what he meant by paying closing.)
It wasn't until after the viewing that I made the promoter aware that I was unemployed. He cringed at this statement, and asked how I planned to get a loan, and what type of loan I planned to get.
I had got in touch with my bank prior to this showing and let them know of my planned business venture. They said that if I had a guarantor with strong income that they would take a look at my loan request. I do have a possible guarantor with strong income (father). The biggest hurdle seems to be getting him onboard. Long story short he is somewhat opposed to my real estate interest and only agreed to sign a loan if I got a summer job (which I got today).
After telling the promoter this, and also that I did not know what type of loan I would need he made the remark, "Well I guess we will hold your hand through that too."
After this me and him talked more about the property and I told him that I would try to get a loan approval this week and also that I would keep him updated on my progress with this task.
On another note, I am aware that I would have to go up on rent to $650 per month in order to stay in line with the 2% rule.
Any advice would be appreciated.
Tell me how I should have gone about handling this situation and everything I did wrong. What questions should I have asked?, How should I progress with the deal?, etc.
Thanks
