Rental #7 Purchased at the Age of 28!
Hi!
Rental property #7 was purchased exactly two days after the birth of my second child. This is the first rental property I've purchased from the MLS, and also one of the best deals I've ever seen come on the MLS.
It's 3PM on a Friday afternoon and I'm in my office scouring the hot sheet. Most businesses in Lafayette shut down at noon on Friday so if a deal popped up I knew I would have an advantage. I have instant alerts setup to notify me as soon as a property hits the market, and I saw the home on MLS before I even got the email.
The home was located 2 blocks from the local University and had all the makings of a great deal. 1,100 sqft 3 bed 2 bath for $105,000. Competition around campus is fierce and I knew it would go quickly. I scheduled a showing immediately and arrived at the home at 3:30pm. Showing instructions were not even setup yet so I knew I was the first to view.
The home was outdated but in overall good shape. The living room and kitchen seemed huge for a 1,100 sqft home so I took out the measuring tape to verify. It just so happened the home was really 1,333 sqft and the listing agent copied the sqft from a previous, old listing. Bingo! I now had a competitive advantage over any other offer.
I called the listing agent and she said the owner wanted a cash deal with a quick close. I rushed back to my office and made an offer for $85,000, cash, no inspection period, $5,000 non-refundable deposit and close in 3 weeks, as quickly as I could type. The listing agent gave me a verbal acceptance from the seller but I wasn’t about to celebrate until I saw the contract in writing.
The showings and offers started pouring in that afternoon and evening but the seller appreciated my strong offer and decided to accept my offer in writing at 9:30PM that night. I was a nervous wreck all night before the written acceptance came through my email. It was not the typical person’s Friday night but oh man I wouldn’t have had it any other way.
Here’s how the numbers break down.
Purchase price: $85,000
Renovation: $15,000
ARV: $155,000 and rents for $1,400/m. My note all in is about $850/m.
The best part about it is I was able to do the entire purchase and renovation with no money out of my pocket! My local bank gave me a check for $105,000 and when the after repair appraisal came in they agree to loan me 75% of appraisal price or $116,250 but I only took out a loan of $100,000 to keep my note down.
A couple of lessons I learned from this deal I will never forget: 1. Always measure a home to verify sqft. 2. If you hustle and take action when most others are relaxing you can achieve extraordinary results!
Below are some of the before and after photos.