1st actionable step taken: offer pending

11 Replies

Good morning all my fellow BP'ers. I wanted to share my excitement with you. I have been researching REI for the past 3 months: reading BP, listening to all the of podcasts, reading "rich dad poor dad", "millionaire next door", "the art of the deal", "4 hour work week" , and currently "think and grow rich".


I've met with some local investors, and have become "friends" with one senior investor who has taken me under his wing, guiding me with advice and knowledge.  
I have looked at about 25 SFH that had rentable potential. But, finally, this weekend, my realtor (also a REI) submitted my 1st offer on a SFH. Here are the details.


1st, it's a short sale. All offers are due this morning by 10a.m.  Friday I went to the home and brought along a contractor for estimates of repairs. The home owner was super friendly, and I talked with her for about 20 minutes on the front lawn before I even looked at her home.  
This particular home needs flooring and interior paint, minimal outside repair and minimal  landscaping in order to be "rentable". I figure about 7 days of work is needed. 

Numbers:
3 bedroom, 1 bath, 1 carport, fenced in beautiful backyard, 1400 sq ft. SFH very walkable to all the amenities locally. The area is called "Murray Hill" in Jacksonville, Fl. It is a very popular younger professional population.
I offered $54,000. Last sold in 2004 for $119,000.  The rent is calculated to be $800/ month (both my diligence and independent real estate agents ultra conservative expectation (but more likely to pull close to $900/month). All numbers based on $800/month rent.   


Expenses: initially: paint and flooring, landscaping: about $5000
PITI: $209 + $60 + $50 = $319
Vacancy 10% (unlikely because I have two individuals all ready stating they would rent it immediately) $80
Property Management (done by myself) $80
Maintenance/ Repairs $80
Capital expenses $80
Total monthly expenses: $559
Total Income:  $800
Cash flow: $241/ month

Again, just wanted to share my 1st "actionable step" with this fine team of investors here at BiggerPockets! ~comments and criticism welcomed.  

Congrats on the first step. Did you find the property on the MLS or was this something that you found through another method. I'm curious because I have tried to negotiate w/ banks on two short sales I have pursued, but the answer always came back that they were pretty firm on the prices they published (on the MLS).

Good luck, Aaron!! You may have to be patient...we have one short sale in MH that has been pending for almost a year, and another one down the street that we got with @Daniel Ryu after five months of waiting. Also came up almost 7k after negotiating with the bank. 

Is this East or West of Edgewood? Maintenance may run a bit higher than average because of the age of these homes, but your rent should be anywhere from $800 to $1100 depending on where you are exactly. 

Anyway, best of luck and welcome to the neighborhood...hopefully soon!

@Carter Melvin to answer your question, yes it was an MLS deal. To be honost, I am 100% ok with the bank not accepting my offer. I needed to get out of my "analysis paralysis" by taking this committed step. They are asking $62,500 for the SFH. There are 3 other offers on this home at his time.

@Jeff Riber

 Hey man! I almost called you this weekend to get your insight on this deal.  But, figured, being the weekend, you were spending time with family and relaxing a bit.  So, glad you saw this. I would love to get together again ( my treat coffee, breakfast, lunch...you name it).  I'll keep you in the loop on what happens here. 

@Michael Noto Thanks for the encouragement. I know it is a long shot to get to closing on this one.  The numbers are great. We'll see what the bank says. 

@Maxwell Lee I really appreciate your contribution to this thread.  I know you've had success here locally in 32205, 32210, 32204 regions.  I would still like to meet you and your wife.  The property is located EAST off Edgewood Ave and WEST of Roosevelt (rt17), one block from Moon River Pizza and Kneed and Maple Street Biscuit Company. 
I agree on the rent price.  I was ULTRA conservative with my numbers basing rent on $800/ month (absolutely worst case scenario), but likely could generate more. I am pleased to know your comps support $900-$1100/ month. 

Thanks again, BP,  for all your support, encouragement and education!

@Aaron Thivierge

Hi and congrats on your first actionable step. My first REI was also in Jacksonville, although I live in Oregon. Whether or not you get an accepted offer from the bank, the next step will be easier. In fact, with it being a short sale, you might not want to wait until you hear from the bank before making an offer on another property. Build on the momentum, and all the best in your REI.

wow, great location then. This area will be taking off very soon. Does it have HVAC? This sounds like a terrific deal if the bank let's it go anywhere near that price. 

@Larry F.   Thanks, and I concur 100%.  I will not wait but rather keep searching, driving for dollars, networking, mailing letters,  exploring avenues. 


@Maxwell Lee , Yes, HVAC is in the house.  Plumbing was updated 8 years ago, electrical updated 5 years ago.  I am looking forward to meeting you the week after next. 

Update: the seller (owner occupant) accepted a higher offer to present to the bank…so, onward to the next acquisition. Thank you all once again for the encouragement and feedback.  

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