Townhouse buy & hold investment.
Purchase price: $109,000
Cash invested: $109,000
3 Bedroom 2.5 bath townhouse. 1,380 square feet. Built 2000.
What made you interested in investing in this type of deal?
Already owned 2 other townhouses in the association and desirable area. Satisfies the 1% rule. Seller lived in it since it was built and maintained the place well.
How did you find this deal and how did you negotiate it?
Was on MLS and just came back on market. I emailed my PM, who is also a realtor about this property. But he was too busy to get back to me. I decided to contact the listing agent myself and told him I am a cash buyer and didn't mind him being a dual agent. Even though there is already 2 other offers, we were able to figure a win-win-win for buyer, seller, and agent.
How did you finance this deal?
Cash. But I may consider to do a cash-out later on.
How did you add value to the deal?
By asking the right questions, I was able to address seller's concerns. Her previous sale fell apart with Roofstock (full offer of $115k) whom asked for $4k reduction after inspection. Since then seller replaced the roof but was still worried about a similar situation. Also she wanted some time/flexibility to shop around for a bigger new place. Seller also provided the previous inspection which shows several small handyman items and an old furnace and roof were the major items.
What was the outcome?
There was already 2 offers: $113k cash and $115K w/ 25% down. I gave 2 offers--$112k w/ a cap of $2k credit (budget for furnace) after inspection & $109K as-is. Both of my offer included a 45 days closing and option to rent for a month at market rate ($1100) after closing. She decided to take my $109K. Listing agent decided to take 5% commission vs 6%. At closing seller was under agreement for her replacement, but still needed the extra month. 1 month rent & security deposit was held back.
Lessons learned? Challenges?
I took a risk by contacting listing agent directly and not having representation myself. But the listing agent was willing to work with me. I also could had ruined my relationship with my PM who was adding as my agent. When I talked to my PM about the place to manage, he was a bit disappointed that I did it without him. But he said he will let it go and agreed that I have a good deal. After this situation, it also seems like my PM is more willing to look at deals for me and ignored me less.
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