The Broker Said It Couldn't Be Done. 4 Unit/Closing Next week
Hey Fellow BP'ers,
So let me start off by saying I have a handful of deals under my belt by now but this one was by FAR the most stressful/hardest buy I have had the pleasure of doing. I won't get too much into it on here unless the readers demand it! I do plan on launching a channel on you tube. Which will be geared around being in the military and getting into real estate at the same time. There, I plan on breaking down why this deal was a pain in the but. Anyways moving on...
There was this 4-Unit, tenants already in place, no work required that has been on the market for over a year. (it's funny because I skipped over this place thinking what a trash deal at first. Only after a couple of deals fell through did it start looking more attractive).
Asking price originally was $250,000. They did a price drop to $230,000 and no one was taking the bite. So I went after it. The broker on this deal was extremely distant to say the least, I was always directed to the assistant who was handling the deal...who was "learning" how to do his job, to put it in a nice way.
Come to find out apparently they had been scaring off like 95% of the people interested because they sincerely thought it could not get traditional financing. They had it under contract once and the buyer backed out due to "complication with financing". To add to that they were certain it would not appraise as a lender had informed the broker this is a "unique property and will be very hard to appraise" (It's two separate buildings on one parcel of land). So because they had this misleading information everyone was scared to move forward until I stepped up to the plate.
I asked had the place been appraised with the previous buyer. The answer was no. So I went for it. I said let's go for it and see what happens. At this time it was all hearsay that it wouldn't appraise. I got on the phone with my lender who went to his underwriter and they got on the phone with Fannie Mae and confirmed that this place could indeed be financed given it's current situation. So we pushed forward. There were hundreds of hiccups along the way. Most of them due to the appraisal and the broker not wanting to put forward any effort as he was certain this would not get cleared and was wasting his time (I saw it with my own eyes in an email, to the lender from the broker "I fully expect this not to work out")
Needless to say closing is set for next Wednesday and assuming survey gets done we should be good to go!
Sometimes people like to think they know what they are talking about when they have really no idea. Unless it has been tried then is it really impossible?
*This is also a success story because with this purchase I am now over the 1 Million dollar threshold in RE holdings! My goal was to do that by 30 but I accomplished it by 26*
The Numbers:
Purchased for $219,000 W/ 2% closing help
Mortgage: $1247 PITI
Down payment: 25% of purchase price (sorry I don't have a fancy get this place no money down! This was the aftermath of saving other rental income and my military income).
Total rents: 2250 (I plan to change out tenants one unit at a time and there is the potential to add bedrooms. Eventually raising rents to around $2600 conservatively)
Tenants Pay all utilities
Plus vacancy/capex/repairs and what not (just didn't feel like doing the math right now)
It's not a home run as far as ROI but this is in an up and coming area and I fully expect this to appreciate rather well in the future. Lot's of job growth and expansion.
Thanks for reading,
Tariq