Just Purchased Rental Home in Ferguson, MO

18 Replies

Hey all,

I just purchased a 895 sqft, 3 BD, 1 BA home near Ferguson, MO. The appraised value of the home is $49,900 and I bought it for $9,500 this morning. The person who sold it to me remodeled the interior and was going to rent it out but her husband, who is an investor, fell sick. They no longer want to hold property; this was their last property to be sold. I also understood that some investors are steering clear of that area until the Mike Brown stuff fades away, so maybe that was part of the seller's motivation as well. 

The figures on the investment look like this:

Market Rent (monthly): $755

Section 8 (monthly): $800-900

Taxes/Insurance (monthly): $116

Property Management Fee (monthly): $75-80

My projected monthly net income is about $450.

I'm a complete noob, so bare with me. I was way too busy today (wife is pregnant and had appointments), so I couldn't make the phone calls I wanted to make. Anyway, I have a quit claim deed... do I need to record this deed at county ASAP? Also, does property management arrange section 8 or do I have to visit the PHA myself? How can I leverage this property to buy another one I'm eyeballing? Any other pointers?

Thanks.

I think the first thing to do is make sure you have a clean title, not sure how you closed and which title company you used. Ping me I can help you connect with some companies I have used in the past. The PM can do all that for you. Do you already have a PM or are you looking for one?

Quit claim deed? Yikes! I hope you didn't get fleeced. You do know that that type of deed only transfers whatever interest (if any) the grantor has at the time? I could sign a quit claim deed to you for that property - doesn't mean it's worth anything.

All,

The title is clean. No liens, etc. I paid $125 to a title company, but didn't close with them. I opted not to. That was the cheapest option they gave me (which I didn't know was an option to begin with).

I just realized you guys are in the St. Louis area. the title company is:

St Louis Title LLC, 7701 Forsyth Blvd, St Louis, MO 63105

Maybe you've heard of them. They seemed pretty forthcoming.

sounds like a great deal. Hopefully there are not any back taxes due or other liens. It is a great deal even if you have to put money into it and it rents for 700 per month. Once you have a renter in it ,you could probably sell it for 25k to 30k to another investor.

Gordon Cuffe, Lender in CA (#1037464)
916-261-2381

Seriously, Ferguson?  I thought for sure this was some troll.  Hope you have good fire insurance!

...attempting to be serious.  I'd suggest going back to your title company and pay for their services including title search and title insurance.  Your purchase price is so low, you can afford to pay $500-$1k for that assurance.

Your property manager can probably handle Section 8.  Although you might consider managing it yourself.  Your local PHA has education resources for landlords.

Leverage this property by doing a cash-out refi but take your time (3 months?).  Can you do some low-cost fix-ups like paint, flooring and landscaping?  If so, the appraisal might come back better.

Make sure you have insurance because they no they cant charge that officer and that whole place is burning to the ground as a result

Originally posted by Account Closed:

Make sure you have insurance because they no they cant charge that officer and that whole place is burning to the ground as a result

I certainly hope not. My son-in-law's family lives in Ferguson.

This is people's lives you're talking about. Maybe you could try to remember that when you throw out such callous statements.

Originally posted by @Gordon Cuffe:

sounds like a great deal. Hopefully there are not any back taxes due or other liens. It is a great deal even if you have to put money into it and it rents for 700 per month. Once you have a renter in it ,you could probably sell it for 25k to 30k to another investor.

 Surely. I was looking to buy and hold as I'm trying to build a portfolio but if I can get 30k with a renter in, I may reconsider.

@Sylvia B.

Tell your son in law to roll out for a few months assuming you dont want him to get hurt. Don't shoot the messenger.

Originally posted by @Raj Gandhi :

Seriously, Ferguson?  I thought for sure this was some troll.  Hope you have good fire insurance!

...attempting to be serious.  I'd suggest going back to your title company and pay for their services including title search and title insurance.  Your purchase price is so low, you can afford to pay $500-$1k for that assurance.

Your property manager can probably handle Section 8.  Although you might consider managing it yourself.  Your local PHA has education resources for landlords.

Leverage this property by doing a cash-out refi but take your time (3 months?).  Can you do some low-cost fix-ups like paint, flooring and landscaping?  If so, the appraisal might come back better.

 I use to manage a lease option years ago. That was my niche. I used sandwich leasing at the time to structure the deals. However, I was way too nice to some of the tenants and got burned. I stopped doing real estate for awhile (like 7 years) to get my barrings. 

This purchase is my second rental that I actually own. My first has a huge mortgage and was actually my primary residence at one time. I'm making about $1,500 a year from that one (not including any maintenance issues that pop up) because I use property management. Not a big whoop on that. But I am a bit shell-shocked from my past landlord experience, so managing is last on my list only because of the potential margin on this Ferguson house.

The house was remodeled, so the fix up part should be easy. When taking the tour, it looked very rent-ready. It needs some yard work, a fridge and stove, though.

Originally posted by @Phillip Vincent :

Would you like to sell it?

See my last post... 

I definitely would consider if the price was right. I could get some renters in to make it more appealing.

By the way, your website is awesome.

Originally posted by Account Closed:

Make sure you have insurance because they no they cant charge that officer and that whole place is burning to the ground as a result

 It looked peaceful there today. We did see a news crew several yards from the burned down QT. Other than that, Ferguson is calm. We were all over the place and saw not one protester or loiterer. The media is pretty deceptive when it comes to Ferguson. I lost a lot of respect for CNN in all this... that's for sure.

Originally posted by @Dawn Anastasi :

@Guy M.  did you close through a title company to make sure you have clean title?

 Hi, Dawn.

Yes, I did but I did not close with them.

This seems like a smashingly good deal, especially considering you will have to put in minimal work to get it rent ready.  I am looking for a PM in north county.  Do you have one lined up already? 

I seem to remember similar issues in LA awhile back due to social unrest.  I wonder how much property is going for there now...

Originally posted by @Himanshu Jain :

I think the first thing to do is make sure you have a clean title, not sure how you closed and which title company you used. Ping me I can help you connect with some companies I have used in the past. The PM can do all that for you. Do you already have a PM or are you looking for one?

 Thanks, Himanshu.

I do have a PM lined up. I spoke to them this morning. I'm going to have the property listed available for December 15th or so. I have to get a stove and fridge by the November 30th and maybe some yard work done, if the snow disappears. Oh, and they can arrange section 8 for me too. That's a plus.

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