People of Bigger Pockets,
I hope this note finds you well.
Last night I made an offer on my first property. After searching exhaustively to find a 2-4 unit building in a very competitive area for the last 6 months (I have been studying and learning the market for years) I finally pulled the trigger. Having walked through TONS of properties and not having found one that fit my qualifications I was starting to get jaded and frustrated. I reached out to many agents in my town to let them know I had a "Commitment to Lend," from a bank, and if they knew anybody who was trying to sell to please contact me and I would be happy to work with them. It was a goal of mine to score a pocket listing.
I found that many agents wanted me to sign an exclusivity agreement stating that they did not want to bring me a property only to have me take it to another agent and have them make the money after they did the work (Still not sure what more they do than surf the MLS?). I was not willing to sign anything like that with any agent and offered to them that instead of signing an exclusivity agreement I would sign a non disclosure or a document saying that if they showed me a property not on MLS then I would use them as my agent if they lead me to a property that wasn't yet on the market. I figured once a property was on the market it was fair game and why should I limit myself to the network of a single agent?
I ended up being contacted by an agent who had a property that was already on my radar a few months ago. The norm for my area is that properties that are listed at a fair price tend to fly off the market in a few hours at asking price or a bidding war occurs. This one was no exception. Three months after this property went into contract something was happening with the financing and it was getting ready to be put back on the market. I went and saw it and once again I was faced with a property that was probably too much work for a newbie like myself. Sure, I would like to take a risk and fix my place up, but how much risk did I want to take on my first property, without a home to fall back on? I have already been living with my parents for sooo long, and despite how much money I was saving and my love for them, I needed to move on. The property looked good and the numbers worked out so it should cash flow generously, but I ended up passing on yet another property, despite honestly feeling desperate to make a purchase. I couldn't risk living in a house under perpetual construction for a year due to my lack of experience. There is always another deal around the corner right?
A few days went by and I got another call. An owner of a duplex had died and the 4 children were arguing what to do with it. Two wanted to sell, and two wanted to hold, while a battle raged on I was reminded of why I don't want my parents money. I do not want to ever have to rely on an inheritance. I do not want to jeopardize my relationship with my family over cash of a deceased family member. I would rather pave my own way.
This new, all red brick duplex, is beautiful. It was well maintained. It was right in the center of my target area. It had a detached garage with space for three cars (Garages alone in my area rent for an average of $125+ a month and even having a garage at all is rare), and a huge front porch. I know you are not supposed to fall in love with a property, but I wanted to live there. The numbers just had to work. I had seen other similar duplexes without a garage sell for near $300,000 in a less prime location and similar duplexes with no garage, but beautifully redone bathrooms and kitchens sell for closer to $330,000 + or get split into condos and sold.
They wanted $279. I offered $280. It went against my gut and I wanted to haggle. But I also wanted this property and did not want it to see the market and watch another investor come in and pay cash a few thousand than what I wanted to offer. I did not want to see the dreaded bidding war, I see it happen too often.
The way it is now (tenants still paying year 2006 rents & I wish I was) each side will bring in $1000, as is, if I take ownership. The garages are icing on the cake (I am keeping one garage for myself). My plan is to add a bedroom and full bath in the basement which has its own private access and huge windows as half of it is above ground. I hope to update the kitchens and bathrooms and bump rents to $1500+ not including the garage. This is still cheap for the area.
When all is said and done I would hope to gross at least $3000 a month. I think this is conservative and if everything works out it could bring a couple hundred more but I don't want to get cocky. At $280 my payment is $1807 a month.
Either this could work out to be awesome, or I could be making one of the biggest mistakes of my life....
I will update you as information becomes available,
So excited,
Aaron
