100th BP Post!
Hello BP Community,
I had originally planned to write my first success story on June 5th which was my 1 year anniversary as a real estate investor. Time obviously passed by and with me starting to become active on the forums, I decided my 100th post would be a good mile marker to write my first story.
My story is not like a lot of the other stories of people doing 25 deals their first year or closing 3 houses in one day. My story is a slow and steady pace of my first year as a real estate investor.
My wife and I bought our first property, a 3 flat in the Portage Park neighborhood of Chicago on June 5th, 2015. We started our property search in August 2014 after many months of me convincing my at the time fiance that we should live in an apartment building and rent out the other units. I started to try and persuade her February 2014 shortly after we got engaged. Fast forward to August 2014, and she was finally on board. We sold the condo that she owned at the time the week before 2014 and we both moved back in with each of our parents. We searched and searched for a property that we wanted throughout the fall, winter, and spring going into 2015. We looked at literally at least 50 properties before finding one that we liked. We found a property that had been on the market for nearly a year. We went back and forth with the owner a few times on price before we walked away without reaching an agreement. (this property was listed for sale from August 13, 2014 - June 30, 2016 and never went under contract). A week after walking away from negotiations, we went to an open house and immediately knew we wanted this property. It's tough to find a property that makes sense, let alone finding a property that has numbers that make sense, along with a unit that you want to live in. My wife and I offered the next day and our offer beat out the other two. Our offer was 15% down conventional and the other two were FHA offers. We closed on June 5th, 2015 and moved in the next day! It was tough living with our parents for 7 months and commuting 70 miles round trip to Chicago from the northern suburbs to look at properties but it was worth it!
We inherited 2 tenants in the property and were very fortunate that they were good people. Both tenants are still renting at the property. Fast forward to September now, my wife and I got pre-qualified and started looking at properties again. This time we were going to us an FHA loan to buy our next property. This worked for us because we were looking for 3 bedroom units versus the current 2 bedrooms that we were living in. We went under contract on a 3 flat in the Lincoln Square neighborhood. After completing the inspection, we decided to back out of the contract as the property had some red flags in the work that had been done on the property. There were some basic things that were done incorrectly that made you scratch your head. After thinking about it more, the scary part was, if some head scratching decisions were made on the rehab that were visible to everyone, what questionable decisions were made behind the walls that you couldn't see? All in all, we made a bad judgement call in offering on the property and backed out of the contract.
Again like the first property that we offered on, we found the property we ended up buying about 2 weeks after backing out of the house in Lincoln Square. We looked at this property on a Wednesday night and offered on Thursday night. The owners had open houses scheduled on the upcoming Saturday and Sunday and accepted our offer on the Saturday night and cancelled their open house for the following day. We were fortunate that the owners were willing to work with us on a few complications that arose from the FHA inspection. All in all, the previous owners were incredibly easy to work with. Our offer was FHA and we were told that there were 2 other offers and they were both conventional. We were also told that our offer was accepted because we were flexible with the closing date and could push it out as far as needed. The house was jointly owned by a brother and sister and both of their families lived in separate units and they each needed to find a new house to buy and live in before they could move out. With my wife and I already having a place to live, there was no rush on our end to close as soon as possible. The closing was originally scheduled for 4 weeks out from the acceptance date and I believe got pushed back 2 times, so roughly about 3 weeks. Once we closed, we actually rented 2 apartments back to the sellers (the units they were currently living in) for another 6 weeks. My wife and I started to market both the unit we were currently living in along with the 1st floor unit on the newly purchased property. The owners that we purchased from were very accommodating when we had open houses. The apartment was always in pristine condition and they would actually leave and leave the apartment to us. We ended up finding good tenants for both the newly purchased unit as well as the unit we were living in. The inherited tenants in the new property also worked out well. Their lease is up at the end of this month and they are moving on and we are currently marketing for new tenants.
All in all, our first 14 months as real estate investors has been an exciting journey! There’s obviously been some minor obstacles that have come up along the way that we’ve dealt with but knock on wood, nothing major. Investing in real estate with my wife has given us another thing to bond over and experience together. We’ve also learned new things about each other from this experience that will only help us in the future. Going into 2017, our main goal (along with having our first child) is to buy another 3 flat to owner occupy. This will give us 8 rental units in 3 years which will be a comfortable pace for us and we will plan our next step after that.
Thank you for listening!
Regards,
Ryan