First Rental Property offer.

[Elisabeth J Buettner]

I am submitting an offer to get my first property. I am excited and really scared. I don't want to make any big mistakes and my realtor seems to be losing patience... Advice? 

[Evan Polaski]

@Elisabeth J Buettner, congrats on putting in the offer; it can be fear inducing regardless of how prepared you are.  A low-ball offer is not a bad thing, depending on the property.  The last flip I did, we put in an offer 20% below asking price.  If you take the asking price as the value, then yes it was a low ball.  In reality, it was overpriced, which is why it had been on the market over 90 days and we happened to be the one that made the offer they finally took. 

As mentioned, due diligence is key.  So get the inspections you reasonably can, with a focus on big ticket items: roofs, mechanicals, septic or sewer lines.  You will never catch everything, and even if you do, it doesn't mean the seller will budge on price.  Beyond that, don't stretch yourself too thin financially.  Unforeseen expenses will always arise, and if all your money is gone to the downpayment and closing costs, you will be in quite the bind.

Along those lines, my other bit of advice, it work for free for a while.  Don't pull the free cash flow out for a while, let the reserves build and build.  You never really know when things will go wrong, or multiple tenants can't pay for several months and you need to float the mortgage from your own pocket.