Diary of an Out of State SFH Rental -Northeast Ohio
I love reading the Deal Diaries on BP so I thought I would write my own. Hopefully, it will help others learn from my experience and avoid the mistakes I make (I'm sure there will be plenty!)
This will be my third rental in a suburb east of Cleveland. It's a small 3 bed/ 1.5 bath, 1075 sq ft home. It's a HUD home that was listed for $50k.
May 10th - bid $42,500, I took a risk and bid on this home site unseen. I have followed the market pretty closely for the past few years and felt that it would make a good rental. Two days later my bid was accepted. If you've never bought a HUD home you might be surprised at the offer process. The initial offer is submitted electronically and if accepted a formal paper contract must be signed by both the broker and buyer. Because I am in California and my agent is in Ohio the documents were overnighted to me on May 13th and then I had to immediately overnight them back. They must be signed in blue ink and there can be no crossouts so sign carefully!
The inspection process on this home ended up being a real pain. When my inspector got there the house hadn’t been de-winterized and all of the electrical fuses were in the off position so none of the water or electric could be inspected. This is a downside of out of state investing, even though I’ve used this inspector several times because I wasn’t physically there to flip the switches they couldn’t be checked. A few days later my dad turned on the electric and had the water company come back out to turn on the water so the rest of the inspection could be completed. No luck this time either! When the water was turned on water began pouring through the kitchen was so it was immediately shut off and again no inspection. The house is a slab home so there’s a decent chance the broken pipe could be in the slab which could really add up.
Knowing that this is a HUD, as-is, home I figured they wouldn't credit for repairs to the plumbing but I did have my agent ask. They came back and said no, so basically it's either take my chances on the plumbing or walk away…
I decided to take my chances! I guess we will see in a few weeks if I end up regretting this. For now, I will keep my fingers crossed.
June 9th-last day of Lowes sale for free delivery & an extra 10% off appliances. I paired this sale with a coupon for 10% off and used my lowes card to get an extra 5% off. In the past I've waited to check out used appliance shops and Sears outlet but never am able to get the appliances in time. This time I'm ordering them new but getting a great deal and can choose a delivery day that I'm in town versus paying someone to wait at the house for the appliances. If for some reason the house doesn’t close I will cancel the order.
June 15th –Received my closing paperwork via Fedex. There was actually much less to sign than there was on the original offer paperwork. I returned via FedEx along with a cashiers check for the remaining balance.