Well, there sure are a lot of success stories on here that eclipse mine. I am still happy with my first deal, considering I knew nothing at all about Real Estate when I got into it. I bought this place in Bridgeport, CT. It's a two family home that was all refurbished. The reason I chose Bridgeport is because I'm from the Bronx and property values run much higher to the point where it was impossible for me to buy something there. So I went and looked at this place in CT and was in love with the character since it is a hundred year old house and most of the original moldings are intact. The space is tremendous compared to a similarly priced house in NYC. I bought the house with my wife so we made an offer on the house and we went into contract. This is where the fun begins.
A couple weeks after we signed the contracts I get a call from the loan underwriter because they discovered that the owner died before actually signing the contract! (Whaaaaaat?) After a couple of days of alarm, this was ironed out. The owner had the ownership of his properties rolled over into another LLC which had the power to sign the document and that was that.
So be closed on the house!! Great!! Now what? Now we have to find some good tenants......well first we fixed the finish in the basement in this place. A two months and $9,000 dollars later it was done.
We get a nice family living in the second unit, and they break our lease after two months. The good thing was that because we had them in there, they used the bathrooms and stuff and we were able to see that there were very BAD leaks in some of the plumbing that needed to be addressed and we still have some remnants of that to this day. It is under control though.
We knew going into the house that we needed to get a house meter for electric. So we get our contractor and permits and everything and get going on that project which was quoted at $3,600 and to be finished in two weeks. => In comes the inspector. Long story short, about 3.5 months and like $20,000.00 later the service is approved. From installing a house meter I ended up re-doing the entire electrical system in the whole basement. The inspector came back 3 times and each time he dug deeper in and found more violations. Fun times.
At this point we get a nice family in unit 1. I think I paid the mortgage out of pocket about 3 months and I had the house for 8 months. The other 5 months I had MOST of the note paid from the rent. Unit 2 gets rented out to students.
Some monies owed from electrical work gets paid, some credit debts from fixing the house get paid and now it's a year after closing. <= I refer to this as the "Year Of Hell" (but I guess it wasn't so bad.)
The house now cash flows about a nice amount of profit per month now that all the dust has settled. It's not easy in Bridgeport, but it can be done.
That's great to hear @Peter Silvestry ! Congratulations!
Did you think at all of leaving the basement unfinished? Reason I ask is that I am from CA, so we don't have basements, but I was listening to the BP podcasts (I forget which one) and one of the guests was saying that he leaves his basements unfinished. I plan on purchasing some homes in the mid-west and I want to find out if you thought through the basement finishing? What were the pro's and con's of doing the finishing?
@ Joe Kling - The basement had been finished like maybe 75 years ago and was in pretty bad shape even though the rest of the house was looking great. The reason why I finished it is because I wanted to rent the whole house out and still have a space to come by and hang out with the family. In hind sight....I should have left the basement unfinished at least until after the house meter was installed. I am not planning on finishing any more basements. :-)
The pro's to finishing the basement is added living space. It doesn't get added to the live-able square footage, but it is more space that can be used for whatever. In my case it is something like over 1,000 square feet and not to mention there are two bathrooms down there.
There are some cons to having a finished basement and one of them is the humidity. You can't mop the floor down there. I have two de-humidifiers to help out with that. Again...in hind-sight...I should have done the Bob Villa thing and set up the channels in the floor with the pump to get rid of the water. That would have added at least another $10,000 to the finishing though.
I liked reading the post. We dont deal with basements in Florida but we did have a house swallowed by a sinkhole last year in Orlando. SAD BUT TRUE the guy was still in bed and they never found him. Irrelevant but I enjoyed reading about your success as well as your troubles. Thanks
@ Scott Harper
OMG, that sounds crazy.
I left out the horror associated with each event. For example, while the basement was being finished, there was water that came down from somewhere up in unit 2. We checked the bath tub that was over that dining room area and let the water run a long time and no leaks. We thought it was rain, but then it rained for two or three days straight and no more water coming down so we repaired the water damage and closed up the hole and cleaned up and we thought that was it. Well....later on (after the basement was finished) when unit two was rented, I went over there to spend some time in unit 1 and cook out and stuff....when I opened the door it was like NIAGARA FALLS coming down in the unit 1 dining room. There was a swimming pool in the basement. Turned out it was a loose pipe, but you had to be standing in the tub to make the water come down. What a mess...I had to throw out furniture I had in the basement, re-do the drop ceiling and some sheet rock walls. The horror.
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Congrats on the first deal @Peter Silvestry
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