All Forum Posts by: Mary Erickson

Investment Info:

Single-family residence buy & hold investment in Coronado.

Purchase price: $750,000
Cash invested: $750,000

This is a home I purchased to rent out and vacation in. I actually lived in this house years ago as a tenant and fell in love with the place but had no money at that time. I moved to Texas and a few years after my move my realtor in Coronado called to tell me they were putting that exact house on the market at 2PM and if I wanted it I needed to come up with cash by 2pm that day to keep it off the MLS. I assumed it would be about $1,200,00.00... when the realtor said 750,00 cash as is I just wired the money.... just hoping the place had not been destroyed in the last few years. I bought it "as is" and arrived a few weeks later to check it out, it was just as I remembered, clean but in need of a little update. I put about $30,000.00 into it and it now rents at $3,500.00 a month (I do just month to month) and I use it as my get away when it's not being rented out.

What made you interested in investing in this type of deal?

I love Coronado and I know homes will rent well here. It's quiet, secure and a short walk to the beach

How did you find this deal and how did you negotiate it?

A realtor friend I kept in touch with who knew how much I loved this house when I was the tenant

How did you finance this deal?

All Cash I made in a successful business I ran

How did you add value to the deal?

I fixed it a bit (mostly cosmetic) I staged it with furniture I bought for it

What was the outcome?

It gives me a place to vacation for free and $3500.00 a month income when I'm not staying there. After expenses I make about $3000.00 a month.

Lessons learned? Challenges?

Keep in touch with friends, treat people right and they'll keep you in mind when a deal comes up. Always let everyone know exactly what you want.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Yes I did. I recommend Karen Hust in Coronado, without her I would NOT have this house. She's looking for another one now because I'm ready to buy one more there. She is also selling my 3 cottage property in Normal Heights San Diego....I trust her 100%. Message me if you want her info.

I live in Dallas and just retired from a stressful job as a business owner with 30+ employees. I don't want to retire completely but I want an easier life and so have been thinking about buying a bed and breakfast with a restaurant/bar.  I've looked at a few sites that sell them but want to know the things I should watch out for and mainly what area of the country is best (just opinions that I know will differ but love to hear them)  I am looking for something that already has good reviews and a staff in place. I have all cash to buy, no loans needed.  I would like to live at the Bed and Breakfast as well and so it would be my home and business.  I don't expect to make a lot of money but is net 6 figures unreasonable?  Any suggestions would be appreciated. 

I'm over 50 and I believe there is never a bad time to invest in real estate if you can rent the house to cover expenses in a downturn or a situation where you can't sell without losing money.   I think the problem is when you borrow money and dont have enough saved to get yourself out of a bad situation if you get into one.  I'm very conservative (don't really believe in loans)  I saved up cash for my first purchase, a tiny condo and rented it out for a year, sold it at a profit and continued that cycle.  I knew at anytime I could be stuck but because I paid cash and had a job and a place I could rent out I knew I could survive a storm.  As long as you look at the worse case scenario in every business deal and are willing to deal with that scenario and still sleep like a baby, do it, that's my advise.

Where in SD is the home located?   Cash buyers expect good deals, it sounds like this isn't going to be a good deal with the price of the house and the loan payoff.  Can you offer seller financing with a good downpayment and a 5 year balloon?  can you  have your money tied up that long?  As a cash buyer in San Diego I would add the price you are charging, plus the PACE loan and if the house isn't still a good deal I would walk away.  Is there a penalty for paying the PACE loan off early?

@Lydia R.. Thank you. I will message you, I appreciate the help. 

What money do you have saved for a down payment?  

@Lydia R. What price range would you suggest would be good for this market? 

I am selling a few properties I've had for awhile and don't need the cash right away, I do want my money to make a return and getting the interest on the loan seems like a good way. I would do a 3 or 5 year balloon and I was told this was easier on the lower end properties because buyers would be more likely to need seller financing. It seems like I would lose if the housing market tanked but I would just rent the house out in the case that someone walked away and I would keep the 20% to 40% down.   I am talking about property in Dallas and in California.  One of the properties is a commercial building in Dallas.  What pitfalls am I missing? is this a bad idea?

I have 3 units built in 1926 and one of the tenants lets everything go, just like you describe.  I now do inspections on all my units every 6 months.  We inspect for leaks, running toilets, working smoke alarms and carbon monoxide alarms, we check locks and fire extinguishers and make sure there are  no other conditions we might happen to see while there...like extra roommates and animals that aren't allowed in these particular units.  When you let someone moving in know that you do inspections on plumbing and working safety features every 6 months you will lose potential tenants that smoke, are planning to move in more people or pets that you don't allow, etc etc.  It's one of the best decision I ever made as a landlord and it costs me about 25.00 an hour to have my handyman go through all 3 units, it only takes a little over an hour as they are next to each other.  

To answer your question...  I would buy the property and keep the  tenant and just fix the issues, they're probably minor. 

I'm not an expert but every time I have purchased a house I have signed an agreement that gives the agent their cut even if you decide to cut them out.  I look over everything my agent sends to the sellers, I look for errors and make corrections at times because realtors are humans and they make mistakes.  My suggestion would be to read everything and don't sign unless it's exactly what you asked for.  Next time, use another agent but this time it may be too late, again, I'm not an expert but I've read a lot of contracts and purchased a lot of homes over the years.