My first property - what happened
I'm 28 years old and I made my first residential property purchase in April 2019. The home is a 3bd/2ba, 2300sqft purchased for $417k. Location is great. This home was purchase originally** as my primary residence.
A couple of quick takeaways from the purchase.
- 1. Definitely use an experienced realtor/lender. If you're not familiar with real estate or it's your first deal the paperwork alone can be overwhelming. Having someone you trust to give you good advice is important.
- 2. It's going to cost more then you think. Closing costs, any remodel, oh you need the vents cleaned? $500, how about that spicket fixed? $250, the grading on the house needs to be altered? $1000. Bottom line, things come up that you don't anticipate. Make sure you aren't spreading yourself too thin between the mortgage payments and your monthly income to cover things like this.
- 3. Contractors are difficult. Had new doors and windows installed in the house, bid at $3k for the install. Half way through he wanted $2k over what he bid me. Long story short the job that was supposed to take 3 weeks took 3 months and almost ended up in court. Only use a contractor through a good referral. I took that stance that you bid it, it's not my problem that you misjudged.
I run my business from home so I'm lucky enough to be able to work from anywhere. I was spending some time out in San Diego and ended up falling in love with it. Decided to rent my house out 6 months after purchasing it, and just landed in SD last week.
Renting my house out really opened my eyes to the opportunity that real estate gives. All in my monthly expense on the house is around $2100 (mortgage, tax, insurance, HOA), I rented it out in 2 weeks at $3k/mo. I'm in full on learning mode about all aspects of real estate investing.
Here are a few takeaways from the rental experience.
- 1. Staging matters. Since I originally purchased the home as my primary residence I furnished it very nicely. I believe this helped a lot when putting it on the market. The listing pictures turned out amazing and I got top dollar in the neighborhood. Next year when it goes back on the market I will use the same photos to generate interest. I think the house shows a lot better with furniture in it (especially if congruent with photos) but that is an expensive proposition to move everything back in to show it. My gut tells me that would be unnecessary but we will see. I think having nice furniture in an apartment/home (even if only rented for staging purposes) to get professional photos is totally worth it. I'll use them over and over again.
- 2. I wouldn't use an agent. The showings we had were approx 50/50 MLS to websites like Zillow. Next time around I will use a service like turbotenant to push the listing to those websites. I ended up showing the house myself mainly so there wasn't value for me there. I can do the contracts myself now so the potential 6% loss on annual revenue isn't worth it to me. Negotiations I would also rather do myself.
- 3. A good experience. This was a good experience so far but I know it's only the beginning. There will undoubtedly be challenges but I feel grateful that it's gone smoothly up until this point for the reason it's sparked my curiosity in real estate.
The rental process looked like this: decided to rent my house out/analyzed pricing, staged for pictures, professional photos, listed on MLS, showed house, potential tenant applications/background/credit checks/verify income, contract, money hand over, move out.
I'm excited to be here at bigger pockets and looking forward to connecting. I hope this helps someone, if you have any questions let me know. Thanks!