Hey y'all!
I FINALLY have some great news! I closed on my first property this week, exactly three months to the day of my first offer on the house. It is a 4 unit property in East Hartford, CT. Gross rents are about 1.8% of purchase price - considering where I am, and the fact that it isn't a war zone I'm pretty happy!
How I found it:
I had been scouring the MLS for a few months at this point. I visited 20+ properties with the world's best real estate agent @Rick Santasiere and made an offer on 2 or 3 of them. I obviously didn't get the first 2, but it turned out that the owner of the 2nd property I made an offer on had several more that he would consider selling.
One conversation lead to the next and I explained to him that if "he's looking to sell, I'm looking to buy". He had no hesitation telling me how many properties he had.
The Ugly:
It took about a month to come to an agreed purchase price (and how it was going to be done [seller kickbacks, vs all financing] while simultaneously doing all of the due diligence. This part of the deal seemed to take forever as it was difficult to get in touch with the seller, get into all of the units, get leases etc.
The Really Ugly:
I had the inspection done, and the bank sent out an appraiser. The inspection led to a slight decrease of agreed purchase price (from 206K to 205.5) but what really shook the boat was the first appraisal report. It came in at 180K. About 25K less than the agreed purchase price. This is where the “nay sayers” really started coming out of the wood work, telling me it wasn’t a good deal. The seller and I continued to negotiate the deal – I didn’t have enough cash to come up 25K out of pocket (205K-180K bank financing). Somewhere along the lines we negotiated it down to 200K.
A few weeks passed, and right before my mortgage commitment deadline arrives, the bank decides that the appraisal is riddled with errors, so they request a second one, at their expense. Somewhere along this time the owner decides he no longer wants to sell, and attempted to use the “inability to get a mortgage commitment” condition as his exit strategy. Unfortunately for him, I had gotten one, however, no one sent it to him or his realtor (neither of them asked).
This lead to a nicely written letter from my attorney essentially saying we would sue if the seller tried to walk from the deal. Knowing full well that we were out of the contract dates, we proceeded cautiously under a “reasonable time” to close.
Getting over the hill
The second appraisal came back at 195K. Once the bank reviewed it, and pointed out more errors, the appraiser raised it to 200K. This was great news! Long story short, after meeting about 234 mortgage conditions from the bank, and offering up my first born, I was able to close! Almost everyone involved in the transaction said this was one of the hardest deals they’ve had to work on…so the idea that “the first one is your hardest one” is probably dead accurate!
Here’s to many more!
