- Real Estate Agent
- Central Coast, CA
- Votes |
The Duplex That Didn't Get Away | A San Luis Obispo Success Story
When I saw Jonathan's post in the Bigger Pockets forums, I was compelled to reach out. He had met a neighbor at an open house who teased the opportunity to purchase his home off market - THE DREAM! Jonathan was looking for someone guidance on how to potentially structure a seller-financed purchase of a large home (5+) bedrooms near San Luis Obispo's prestigious Cal Poly University - a great house hacking opportunity! The property featured a large amount of deferred maintenance and unfortunately... an owner who drastically overvalued the home. Together, Jonathan and I exhausted ourselves attempting to navigate a potential deal with this seller. When it became clear it was never going to happen under terms that were even remotely realistic - WE MOVED ON.
Having subsequently built a strong rapport (the best part of the Bigger Pockets community!!), I was honored to have the opportunity to represent Jonathan as he continued his pursuit of another investment property. We were pleased to see a duplex in SLO's historic district that had recently had a massive ($75K+) price reduction. Perfectly located within walking distance of the popular local Amtrak station and well-designed as two mirrored 1bedroom units, it seemed to be the perfect HOUSE HACK. It had been on the market for a while and every investor or investor-friendly agent in the area had had their eye on it. It had been sitting for a while because it came with some major problems:
1. Large amounts of deferred maintenance
2. Two BRAND NEW leases that locked in the tenants for a full year at BELOW market rates
We nonetheless saw the potential, especially given the reduced asking price. Ultimately, we were able to get the property under contract. The escrow was a bit tumultuous as the due diligence period revealed quite a bit of big ticket items that needed repair (Roof! Foundation!) and the lending journey was complicated by a fun thing called BIT COIN. Free advice: If you're going to purchase a property using any crypto currency, liquidate it at least TWO months before applying for a loan!
It seemed this duplex simply did not WANT to get sold. When the appraisal come back at well above the purchase price, we had assurance that this indeed the great investment that we envisioned and also worth all the hassle. Thankfully, we were ultimately able to make the math work by requesting a LARGE credit at closing. We made the case by producing the invoices and bids from multiple contractors and were also fortunate that the sellers were themselves in another escrow and were extremely motivated to get the deal done.
The large credit at closing also afforded Jonathan the opportunity to have extra cash on hand to cover some of the much-needed repairs and also offer CASH FOR KEYS to the existing tenants to incentivize them to leave early.
This is what I love about real estate and about investing. I got to work with a savvy buyer and a rockstar investor-friendly lender to get the deal done and I couldn't be happier for my client and fellow BP'er!The Duplex in downtown SLO purchased by BP'er Jonathan Olcott
Real Estate Agent California (#02162444)