Updated about 5 years ago on . Most recent reply
My Latest Deal, Thanks to Networking
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I found this place off-market thanks to a real estate investing meetup I was running for a little while. Long story short, one of the guys who came to my meet-up knew a guy in Duluth who he thought I should know since I had a few places up there already. Duluth guy and I had a phone call back in January of 2020, and made plans to grab coffee the next time I was in town (I live about 2 and a half hours south in the Twin Cities). We had made those plans for March, and we all know what happened then.
So we postponed the in-person meetup but stayed in touch via texts, him keeping me updated on some of the rehabs he had going on, etc. I finished up some refinances at the start of April and was ready to find my next deal. I told him I was looking for a single family college rental, close to UMD or St. Scholastica. He told me he was trying to sell a single family college rental, close to UMD and St. Scholastica.
We chatted about it, I looked at some pictures he had of the property, and we drew up a purchase agreement contingent on an inspection. Inspection good, appraisal good, so I closed on it last week, met him in person for the first time at the property where he walked me through the place, and we now have it listed for lease starting 9/1.
The numbers are solid for now, but will eventually get better when I'm able to get on the student leasing cycle, which will get rents closer to $1950/month. Plus, I can add a 5th bedroom in the basement by adding an egress window and framing up a room, which would get rents closer to $2400/month since college houses generally rent by the bedroom, at least in terms of price.
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Hey Matt! Good to see you're still making moves!
A couple of questions on this one:
1. How did you get 3.625 on this? Is it a 2nd home mortgage? Banks seem to want me to go commercial and 5.25+ for "investment" properties. But then the bankers coach me to say "it's a 2nd home" for far lower rates, locked. I'm buying a "2nd home" that's substantially more money than my primary residence, but I'm confident it'll cashflow as a STR as it's lake property.
2. How'd you get your closing costs so low? Did the seller cover some of it? With the low interest rates right now, I've seen closing costs in the 5 digits. Sick, but I'm sure they've gotta make it up somewhere, with rates as low as they are.
Keep up the good work, and keep sharing! It's appreciated. Hope to see you when we can get back together at @Michael Schraepfer's meetup at Heirloom in Duluth.