Investment Info:

Single-family residence other investment in Sacramento.

Purchase price: $505,000
Cash invested: $100,000

Bought my first primary in December 2020! This was my first "big boy" purchase I did on my own (w/ help of my partner) to establish a foundation. We bought a single family 3bd/2bath 2,000 sq ft home in Sacramento!

What made you interested in investing in this type of deal?

The pandemic and our first born made us desire more space. We were living in a townhome for about 3 years before and knew that we needed a bigger place for our kid to grow up.

How did you find this deal and how did you negotiate it?

Sacramento (and all markets right now) are seeing a huge sellers market! We worked with an agent for 4 mo. and we made at least 10 offers - after getting continuously let down and having to outbid 20-30k above the list price, I decided to change my strategy and go direct to the listing agent! We offered at list price and they accepted our offer. Sometimes in this market, going direct to the agent will work to your advantage. Agents will also double end the deal - it's a win/win!

How did you finance this deal?

20% down conventional

How did you add value to the deal?

New paint
New flooring
Updated master bath
New lighting

Lessons learned? Challenges?

Buying a primary is WAY different than an investment.

When you buy a rental home, you're looking for the quickest way to get a renter in there while trying to minimize cost.
When you own a primary, you have more emotion invested in the deal. You're looking to make things absolutely perfect and you don't mind spending the extra money.

When you buy a rental home, you're solely based on numbers.
When you own a primary, you're mostly focused on location.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Agents (direct listing agent)
Lenders (local her in Sacramento - fairway mortgage)

@Jason Pabon I respectfully disagree with your comment “agents will also double end the deal, it’s a win-win”

While I have represented both sides of a transaction multiple times, in most cases it is not in a buyer’s best interest to be represented by a listing agent. The seller’s agent has an established relationship with the seller. At no point when that agent represents you are you receiving 100% of their attention. When decisions are made regarding who to use for inspections, how much to negotiate for repairs, which title company to use, which natural hazard company to use, how much to disclose about the property’s history, how much to disclose about the neighbors/neighborhood, etc the listing agent is representing their seller. Always keep that in mind. As an investor I would be willing to spend a bit more knowing that I have someone 100% working for me and willing to suggest that I walk away from a deal.

@Ben Howard - appreciate your response. Speaking from personal experience here. In a hot seller market like Sacramento, you are receiving multiple offers on almost every home. Going direct to the agent worked best because I got the home I wanted and the agent didn't have to split his commission (win-win). If I had buyer representation on this deal, I would've had to bid $20-30k above ask and waive my appraisal contingency. Not something I'm willing to do!

Yes, there's always benefits to having someone on your side (esp. if you're a first-timer) but if you know your market and know the steps in a real estate transaction, shouldn't be hard to find an inspector and title company to work with. Just my take!

@Jason Pabon That listing agent must have an interesting relationship with their peers who have submitted (as you say $20/30k) higher offers and then find out it was a dual agency deal.

Originally posted by @Ben Howard :

@Jason Pabon That listing agent must have an interesting relationship with their peers who have submitted (as you say $20/30k) higher offers and then find out it was a dual agency deal.

 That is my thought.  You were his best offer and he double ended it while representing the seller in his capacity as a fiduciary.  If you sold $20-30K below other offers he and his broker would be dealing with SAR ethics complaints.  Agents will strait up send that info to the seller directly AFTER the deal closes.   "He Mr. X... we offered $25K over your final sales price... just thought you should know".  I do everything I can do avoid dual representation.  I will refer them to somebody and get a referral fee but I hate representing both sides. The money doesn't matter as they trying to squeeze your commission anyway.   As Ben suggested... doing stuff like that will give you a dirty rep with other agents that ends up hurting his clients.  

@Jason Pabon Going straight to the listing agent was the same strategy I used as well. Just like you, I beat out the other offers. It does work.

is it required to put 20% down when it's strictly an investment? Or can you put only 5% down on an investment property?