So I thought I would jump back into posting since I have been doing lots of reading, and listening to all the podcasts. Great work Josh & Brandon, keep it up!
So our situation is this; we currently rent a 2/2 apartment, been saving for over a year, and have been looking to purchase our first property. With 3 kids we need more space than what we currently have, and quickly discovered that having a yard is a definite must have. After looking for a duplex in Vancouver, WA (the original) that has 3 beds and a yard, we realized that even the distressed properties were out of our price range, with the market heating up. So we looked into buying a re-habber, but there was a lot of competition, and we just couldn't connect on a deal after multiple offers made.
Undaunted we did not settle into paying more than what we wanted or knew a house was worth, and kept looking for that ideal first home; a flip that had rental potential in the form of a detached building we could convert to a rental, an unfinished basement, etc. (I'll do all the work myself, as construction is my profession). We looked at 203K, HomePath, REO's you name it. Finally 2 weeks ago, we got back from a camping trip, checked Redfin, and there it was. The house we had previously put an offer on, was back on the market. It's a 4/2/2 with a separate detached shop that has a MIL suite over the shop, that just needs a little kitchenette to be rent ready. We offered right away, slightly above asking as it's a Fannie Mae and well below market value, and I know I can easily get the 1% rule or better renting out both units down the road. The other buyer tried to go USDA (not sure if they tried direct or guaranteed), but they ran out of extensions, so Fannie Mae put the house back on the market, and we had kept an eye on the house through Redfin.
Purchase Price = $177,000
Loan = FHA 203b = 3.5% Down
Low out of pocket entry into real estate investing with no outside (Bank of Mom) help, with plenty of equity and room for a family = Priceless
Hit me up if you want more details, I'll keep posting here as the process continues, our inspection is Thursday, fingers crossed nothing comes up!
Hey @Chris Gillins hopefully the inspection will go smoothly and you are able to move in there quickly, I am sure your kids will appreciate it greatly since they will all have a bedroom now. keep us updated.
I have a couple for questions for you?
1. Have you calculated your out of pocket cash investment into the property (down payment, closing costs, and repair costs)?
2. What equity are you talking about? What does the house appraise for versus the comps? Unless you are going to flip this property, your equity for the first 12 months is going to be limited to the 3.5% down payment you pay. Most banks (and even private money lenders) are going to use the most recent purchase price if it is within the last 12 months, regardless of the appraised value. Check with your local bank or credit union about your ability to refinance. Also, your equity is reduced by the costs associated with getting your equity (selling costs or financing costs).
3. How much gross rent can get for the property?
God Bless You!
Hi Chris :)
I'm new to BP and am in the Vancouver area. I came across your post. Wanted to check in and see how the purchase went for you? I am currently in a similar situation.
hope all is well.
Purchase went through very clean once we got through all of the hoops needed by Fannie Mae. Working on drawing up plans and developing the budget for renovating the shop apartment currently.
Welcome to BP!
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