Living for free and it is great
Hello, I wanted to share a purchase of a duplex I made in September.
I started looking for a place to rent in April. I started searching and found a couple of places that I may have liked. While looking, the notion of me buying a multi-unit property so that I could live rent free came around. Being in early May, I had not yet starting reading BP nor thinking I wanted to become a "real" real estate investor.
There were two properties I found on the MLS that seemed like a good deal and that I was very interested in. Being that I was going to live there, the emotional part of wanting to live in a specific area and quirks, etc did play a part in my final decision. So the property I ended up going for was in a neighborhood I was more familiar with and the size of the duplex a bit smaller than the other. I also wanted to move fairly quick on the closing and the owner of other property was going through a bankruptcy so I thought the one I was buying would not take as long.... well 105 days to close was a lot longer than the 45-60 days my agent thought it would take...
The offer and counter - The house was originally listed on the MLS for 84,900. A few days before my offer the price was reduced 79,900. It was on the market for a few months by this time too. With the help of my agent, the first offer we made was 72,000. They countered and I do not recall the exact amounts but my final counter of $76,100 was accepted.
The numbers:
Bank financing was 2.90% for 20 yrs with 15% down - payment $358/mo
Taxes are $100/mo for the first year then half that for being OO the following year
Insurance is $43/mo
Total expenses = $501/mo
Rental income = $650/mo
$650-$501 = $149/mo extra, which covers my utilities! The renters pay all of their utilities. Plus $50 more after my taxes go down in 2015.
A great part was that after my closing costs, I did not have any more expenses to find and get tenants moved in... who moved in only a week after I did! If I have expenses they will come out of pocket for now but when I move I should get enough rent from my side to cover all of that and a little extra.
While waiting and waiting for the closing is when I started reading BP. So looking at it from an investor's hat, I was fortunate that the numbers worked out pretty well. A couple of things in hindsight that I might have done differently are; a longer loan term so my payment could have been lower and try to haggle the price down a little bit more than I did. But based on outcome, I think I did pretty good and already have some lessons learned from the process!
Thanks for reading.