All Forum Posts by: Aaron Desimone

I come to BP for everything. I love this site and the people here have made it even better. I want to share, maybe not success, but my experience starting out in real estate investing.I do not have a blog so felt this was an appropriate spot.

I have always wanted to invest in real estate. I found this site by accident, and listened to the early podcasts. I got engaged and decided to move closer to both our families soon after. I sold my nice house (I really liked it), quit my job, and moved back across the country from the northwest to the northeast. I started a new job, and knew this was my opportunity to begin my real estate venture. I searched for investment property while I lived at a hotel for a month and a half and found a duplex FSBO. I tracked the owners down and got it under contract for 50K. I had to leave for 4 months so we closed while I was away.

The house is old and small, but not horrible. It needed everything possible, and with my background in construction I thought manageable. A few days after closing I called the oil and electric company and had the utilities put in my name. I couldn't wait to get back. Finally my own duplex (I wanted bigger but could not find one).

I returned and got right to work. The old boiler was removed, floors ripped up, drywall, and electrical. The bottom unit is where I wanted to live and during my two week vacation installed hot water heater, plumbed, rewired, flooring, paint and electric baseboard heaters. During this we went 3 days without water, slept on the subfloor, and we had a hot fall (for which I was grateful for).

We got the bottom apartment looking decent after 2 weeks and I went back to work.After and before work I would finish the bottom apartment or work on the upstairs replacing and repairing.My plan was to take the equity we put in and use it to purchase additional properties.Unbeknownst to me one fateful day the oil company delivered oil to the house, to a boiler that was outside, a tank that was not hooked up, and a homeowner that didn't want or order it.100 Gallons of fuel oil later and we were dealing with the DEC and contamination cleanup.The appraiser, that I was getting from the bank to explore a HELOC, came the same day as the oil spill and still appraised the house during the chaos of the morning and afternoon.

The bank would not lend on the house due to the spill (which we are still cleaning up) but the appraiser did set the value at 104K.We keep dealing with the cleanup, and have been for months, and it seems to be coming along.I decided to empty my retirement in order to purchase another property while we wait for the cleanup to be finished.

I found a great property from fannie mae and got it under contract for 38K.The selling realtor is frustrating at best to deal with.We are at the inspection part and I guess I am responsible for turning on utilities and making any repairs necessary to close as it is an “as is” property.Not a huge deal right now, and will know more, and expenses, when I go this weekend.

Throughout all this, over the course of about 6 months I have looked at as many properties that I could.I have made offers like crazy, and have had a multitude of deals fall through.I say probably for the best, and has been a great learning experience.I have tried owner financing deals, half owner financing half conventional, commercial apartment buildings.Pretty much anything that seems like it would be a good deal I have gone after.I have wrote letters, contacted absentee owners, tracked down properties in distress, MLS listings and pretty much anything else besides sending out cold letters.

In summery I have a property I live in that I cannot touch the equity in until the oil contamination is cleaned up, a lot of failed attempts to purchase more property, and a house under contract that I may, probably have to, put some money in in order to close.I have felt more uncomfortable doing real estate than anything else and I love it.It has been great! I cannot wait to see what the future holds.

I am sure there are people out there wanting to start investing in real estate.I am just like you. We do not have a lot of money and definitely are pinching pennies all the time.We have a wedding coming up and closing on a house at the same time, as well as dealing with our current house’s issues.Some things may seem insurmountable but they are not, it is uncomfortable and you may go to bed worrying but most of the time I am excited.I am excited about expanding my future and the future of those around me.I feel like I have more control over where my life is heading and the financial stability for the future.I always felt uneasy throwing money in a distant account waiting until the twilight years of my life to get at it.

I also want to add that I would not be where I am without the help from a great realtor and investor, and who I consider a friend.She was recommended to me by a bank when I first moved here and has been a tremendous mentor and friend.I also have a great bank, and loan officer who is so amazing and goes the extra mile every time.Finding these people to help you is not hard, and definitely worth the time.They make all the difference in failure and success.

I look forward to the future and what can be accomplished.There are so many opportunities and I hope anyone waiting to start investing will jump on them.I do not even consider myself an investor because I do not have very much experience but it is a fantastic experience.

It seems like a whirlwind at times.We have rented our top apartment in the duplex just a few weeks ago.Right now my goals are small but achievable. We put equity in the duplex and hope to be able to get that out this year, and want the same for the property we are trying to close on.We hope to buy a single family home for ourselves and another investment property this year.We are unsure if we can reach these goals in a year, but why not try.

I hope you took some good things from my story, and anyone starting out, or wanting to.I know this was a lot of rambling, but I appreciate you taking the time to read, and hopefully took something away from it.

@Dan Kelley

The reason I switched to electric heat is because the town I live in has some of the cheapest electric rates.  Anywhere else I would not have done it due to the high cost associated with it.  The material (heaters, wire, breakers etc.) and the labor (my own) let me put in the electric baseboards throughout the house for under a 1k. 

I saw the heaters with the fans, and also looked into the hydronic heaters but thought they were a bit expensive for the simple house that I have.  If I had to do it over again I would opt for the wall mounted electric heaters, like cadet or similar brands, where it is just a box heater that is mounted into the wall with the fan (not sure if we are talking about the same thing).  I would choose that design because I am worried that tenants may not be as vigilant about keeping wires, curtains, and various other objects clear of the baseboard heaters thereby creating a fire hazard.  I am just not sure how the wall mounted box fan heaters would work if you put one in a room with multiple windows and a door in an old house like I have.  The house I have is old, and has old windows, so I used the regular baseboard heaters to put under the windows.  I am sure in a newer house, that is better insulated and with better windows, a single box heater that is wall mounted would work  perfectly.  I would consult an election or someone who know a bit more about them first though.   

I guess I took the long way to answer your question, I have saved money switching from oil to electric due to the cheap rate that is afforded to the town I live in. 

I am not sure if this is still active, or if you decided to go with one of the other great ideas the other members suggested.  I am not an electrician, but was able to navigate the swap from oil hot water boiler to electric baseboard heat. hopefully you find this helpful and relevant. 

I recently closed on a duplex and took out the hot water oil boiler that supplied heat (through hot water baseboard heat) and hot water to both apartments. I am not sure of your current set up is with hot water in your units.  I installed two electric hot water heaters for the water portion.  I then installed electric baseboard heaters (just the regular cheap ones that are similar to cadet heaters).  I hard wired then to the panels, and have two breakers per apartment that control them. (each apartment has a separate meter, and both are 100amps each).

At first I looked into putting a wall mounted thermostat but due to the watts (a thermostat can only have so many watts per unit, and each breaker in the panel can only handle so many) I ended just getting a unit mounted thermostat.  They are easier to install (although I thought a little expensive as they are as much as one of the heaters) because you do not have to run any extra wires.

I believe the rule of thumb I found was 10 watts per square foot when using electric baseboard heaters.  250 watts per foot of electric baseboard heat.  You also need to know what heaters you are getting, mine are 220, 110 is not the same and are not interchangeable.  I am sure an electrician can give you a better grasp of this, but I was able to do it and I didnt have any problems. I live in the bottom apartment and have not had any issues. 

I hope everyone had a happy Easter

I just got my first investment property under contract today.  It is a duplex that the seller and I negotiated down from 65k to 50k.  I have to admit the rush of the negotiations was amazing!  I left him with a contract on Friday and we signed it an hour ago.  I dropped a copy off at the bank so we could start the loan application, and one copy at the lawyer's office so they could look at it.  The online estimates for the property range from 100k to 124k.  The bank said it is right around 100K.  

The property is an over under duplex, 2 beds and 1 bath per unit.  They currently have one tenant who pays $625 a month, and will be out by the end of the month. The one unit is vacant, and that is where I was planning on my fiance and myself living until we can buy another property.

Property details

Purchase price: $50,000

Taxes: $2700 a year

Electric: paid by tenant

Water/sewer/garbage: $200 (paid by owner)

Insurance: $600 a year

Rent per unit: $625 (just the current rate and I will be living in the other unit for now).

Loan from the bank: $45,000

Interest Rate: 4.375%

Length: 30 year fixed

Estimated monthly payment (including escrow of taxes and insurance): $500.25 a month    (I got a printout from the bank).

Total money due at closing: $8500 ( I rounded up because they did not include the lawyer fee.  The lawyer said around $400).

The property can be rented out now, however I did want to upgrade the electrical panel (which is fuse/ with 200amp service/ 100amp per unit), and to change the heating and water, which is currently oil, to electric baseboard heating and put in separate hot water heaters in the units (the area does not have gas, and the lowest electric costs in the country).

I want to thank everyone for posting and sharing their knowledge on this site.

I would love to hear any feedback on this deal.  It is my first investment deal and I hope I am starting off on the right foot.

Hello Everyone

This is my first question on Bigger Pockets!  I have read a ton on here and appreciate all the posts that everyone participates in.  I will jump right in.  I have found a 4 unit property that is for sale with a motivated seller.  The property needs work; however it is fully rented.  the asking price is $65,000, the amount of gross rent comes to $2,070 monthly.  I do not have enough money to secure a conventional loan. I talked to the seller and we are in negotiations on seller financing at this point.  

My questions are, because this is my first investment property, what should I do to secure this property if we both met at terms and price?  Do I go through a lawyer to set the terms? How do I find out if there are any liens, or surprises financially? Do I need to go through a title company to secure the deed in my name? Lastly, after reading on refinancing here, do I have to wait the 6 months to a year in order to get a conventional loan to buy out the current seller? 

I am a little out of my comfort zone, and would appreciate any and all information, comments or insight. 

Thank You

Aaron

@ Suzi B.

I was looking at down payment ideas to help me get into my first property, and I really like what you said "I hesitate when it means borrowing money so that you can borrow money.". I sometimes get ahead of myself so thank you for great advice!

I recently was listening to the podcast and wanted to learn more on the 2% rule. I have been looking at properties for rentals (I hope someday to jump in the pool) and quickly did the math for this rule, an they did not meet it. I would like to thank everyone for posting their own experiences with managing this rule, an providing realistic considerations when buying properties.

Thank you Mary and Robert. Happy new years to you both.

@Robert Leonard

Thank you for the advice. I have already found the podcast and absolutely love them, and the information that is packed into each one. I was looking for a place to give real answers and not fantasies about real estate investing; Bigger Pockets is the only place for that. I have found that even though some of the podcast do not focus on my goal there is still a lot of information that I am able to take away in order to become more aware of the intricacies of real estate investing.

Thanks again

Aaron

Hello everyone

I am new to the site, but I have been reading other people's post. I love the articles on that are here, and have been learning a lot. I live in Montana. I have been interested in investment real estate for a long time. I would like to obtain rental properties in a buy and hold investment. I recently have begun the process to purchase my first home, which will be my primary residence, and am surprised at the process (closing at the end of January). I am glad I decided to stop paying low rent and purchase a house before investing to see all the steps involved. I appreciate everyone's hard work, and the real world experience that has been posted on this site. I hope by the end of 2014 to have acquired my first rental property. I look forward to learning much more, and hopefully I may contribute as much as I gain in the future.

Thank You

Aaron