All Forum Posts by: Todd Aaron

 Thanks Jerry...  I would hate to lose a deal because I was negotiating for the sake of negotiating.  :/

My first attempt with an excepted offer ended with a lot of issues found on the inspection and the seller was not willing to accept a lower offer.  So I had to let that one go.  

I ran across several deals after that but I was too late on all of them.

The other day I came across one that was listed the day before in exactly the area I was looking for but I couldn't get in to see it and make an offer at lunch and was scheduled to see it right after work, then found out they had accepted an offer that afternoon.

The next day I find out that the offer fell through (buyer backed out the same night as the offer), so I got to see it and made an offer.  They were asking $122,500 and I offered them $120,000 and asked that they pay closing costs. They countered with accepting the closing costs but raised the price to $123,500. 

I wanted to keep negotiating and win a little more, but then realized they could take my counter to their counter and sit on it and use it to entice a better offer from someone else. So I signed it and moved forward.

The inspection came back with several issues, but a couple of them were big ticket items.  The A/C unit outside and inside were both from 1990 and way past their life expectancy and they are a 1.5 ton and the square footage calls for a 3.5 ton, so it is undersized.  

The gas water heater came back in poor condition and was showing signs of flame rollout (meaning fire had come out from under the water heater to the outside - fire hazard!). 

I talked to the realtor tonight and she is going to talk to the listing agent tomorrow about options. 

The current owners have used this as a rent house for years and apparently told the listing agent that they expect there will be some things that come back on the inspection that would need to be negotiated.  So I am hopeful. 

The house is a 2 bedroom, 2 full bath with a two car carport.  The plan is to increase value by converting a luckily configured dining room into a third bedroom and close in the car port and create a two car enclosed garage. 
I am also considering opening up a few walls (between entry hall and living room and between living room and kitchen) to give it a lot more roomier feel... and also doing some updating to the kitchen and bathrooms.

The plan will be to live there (i'm getting a conventional loan with 5% down which requires that I owner occupy for the first year) while I do the modifications and upgrades and possibly rent out the master bedroom during that time to offset some costs. Then find another place and set this one up as a rental... hoping that the improvements will raise the value enough to drop the PMI.

Just heard from my lender who said that all lenders typically have a 12 month owner occupancy clause in the deed of trust but he has never seen it enforced.
I'm not planning to push the "never seen it enforced" part, but I was previously under the impression that it was going to be two years before I could jump out to another property and get a second tenant in here and see some positive cash flow.  So that's pretty exciting!

 Thanks Aaron! 

After this one closes I have been talking to my friends who are interested in possibly investing in one together.  They have two plus the one they are living in right now (one more year then they will be buying another to move to and renting this one), and they are interested in eventually getting into a small apartment.  I don't know if we would be able to make that jump just yet, but maybe another multi-family (duplex, triplex or Quad) would be a good option.  She likes adding value by updating, decorating and landscaping, so possibly a more entry level flip (paint, floor coverings, landscaping, and appliances) might also be an option... Not exactly sure but just know I don't want to get stagnant now that I actually pulled the trigger finally. 

 Thanks Michael!  Yeah, I am excited about that low living cost!!!!

 Thanks Theresa.  That is definitely something to think about - getting them on a month to month... Their lease is actually up in May anyway, so that may just take care of itself. 

I am doing this deal with no realtor and the seller also has no realtor, so we are able to talk face to face.  I asked the seller previously about the tenants and she said they are prompt on paying and she never has issues with them. She said that she was going to raise rent for the next tenant in the empty side that she has been advertizing for but that she was going to continue to leave the rent at the same level for the tenants that are in the rented side for as long as they were to stay. She said they have been there for 3 years already and they do want to stay. 
But since I didn't approve of them myself, I like your idea of a month to month. 

I did meet two of them and they seemed nice. I have driven by a few different nights and checked things out and so far no wild parties or anything.

I was thinking of doing some work on the empty one I was moving into then checking with them (if they are working out ok) to see if they want to upgrade to the nicer side once I am finished with it (at a price increase of course)... then I can work on the other side.

Hi everyone!

This past weekend I got my first investment property deal under contract.  Currently waiting for scheduled inspections.  I have an option period of 21 days just in case something is revealed or whatever.

The property is a duplex that is a 3 bedroom / 1 bath on each side, and one side is rented and the tenants have been there for 3 years and are interested in staying. The seller mentioned that they were concerned about having to possibly leave as a result of the sale.  Thats the last thing I want. I told the owner that I want to keep them happy and have them stay. So that seems pretty positive. 

I am taking advantage of the low money down and good rate for an owner occupied type conventional loan, so I will move into the vacant side for the time required to satisfy the loan agreement (usually two years), then move on and rent the second side.  In the mean time, while I am there, I plan to do upgrades and some remodelling to that side which should allow for a higher rent once the time comes to put someone in there. 

This place needs some work - not like massive amounts of big things, but more like a lot of little things.  I am a do-it-yourself type and enjoy the type of work that this would benefit from having done, so it will be a good match i think, considering having to be there for a couple of years. 

The one rented side will pay all but about $150 of the Loan, Taxes and Insurance, so it will basically cost me $150 to live there.  Not as awesome as these totally free deals I see out there, but I thought that wasn't bad being my first attempt.  And after I move out, the other side will make it a nice positive income property. 

It also has some character - it is located in a national historic district in an area that had seen decline in the past but has been on the rise for years now with some properties converted to bed and breakfasts and other converted to commercial use such as law offices and doctor's offices.

Anyway, just wanted to share... excited about the first step into investing.

Thanks!!!! :)

Hey everyone.  I am extremely new to real estate investing. I am talking new as in I have just this last weekend gotten my first property under contract and I am waiting for inspections to be done to make sure I don't need to exercise my option clause. 

I am starting with a multi-family but only a duplex, and I am going to take advantage of conventional owner occupy financing and move into one side for however long the loan paperwork says I have to before moving out and having the income from both sides. 

But here are my thoughts and the reason I wanted to post in here on this subject...

I am less than a week into my due diligence and so far everything is great.  But yesterday a thought crept back into my head that I had just before submitting the contract to the seller, and that consisted of "Am I making a mistake by not going bigger?" 

My concern at this point is that I may have been thinking too small... and now that I am about to be locked in, have I limited myself and possibly put myself in a handicapped position in reference to where I could be spending my down payment, credit and time?  

As to your question in this thread of "What's stopping you from investing in Multifamily Properties?", I am thinking possibly some may be thinking too small... that they aren't capable of handling a multi at all or yet, may be their reasoning.  This is what I was previously thinking about jumping into apartments (5 units and larger). 

That and the idea that apartments are more of a mystery than a 2-4 unit which is handled like a regular home while "apartments" are a different beast altogether.  People can wrap their heads around the concept of purchasing regular homes and just add the additional 1-3 units in... but the mystery around the "commercial" nature of apartments feels like a hurdle to get over that there is not as much information out there about.

Still haven't met with my lender but the seller accepted my offer for the duplex!!! 

Thanks Marcus.  I am heading out to meet the seller for this duplex here shortly to give her my offer. Getting nervous. First time for me doing this. 
I still have not lined up the meeting with my lender yet. Possibly this afternoon!