Hello guys,
Some of you have seen me post about the deals I have going on. I don't have a ton of deal but I'm not a new investor either. I currently own a 6 family in New Haven, a 3 family in Naugatuck, and a single family in Memphis, TN for rental properties. I also currently have a flip I'm working on in New Haven and have sold 2 flips this year. A little background for you, I flipped 1 house previously to these two and that was 5 years ago. Before that I bought my first multi family in Naugatuck at the top of the market. I then bought a single family for myself (Worst investment a year later) and bought a 2 family in New Haven (Second worst investment) a year later. I ended up selling both of those at a loss, the single family at a major loss.
Anyways, to the current deal I have going on. A 4 family house showed up on the market 2 houses down from the 6 family I have. I am a big advocate of trying to buy up neighborhoods (I Love monopoly). This was my first chance to buy in the same neighborhood. This house showed up extremely cheap and probably part of the reason is that they are renting out each unit for only 700 a month. In my 6 family I rent out 2 bedrooms for 950 a month. So I know the neighborhood and what prices I can get. Also, East Rock (Super high end ritzy area) is just on the other side of the park. My hope is to one day own enough properties in this neighborhood to rehab the whole thing and get the rents or near the rents East Rock is getting (1500+ for 2 bedroom). This is a LOOONG term goal.
So the house popped on the market for 180k. First day on the market, I put a bid in sight unseen. Slightly higher than the 180k, I'll give you closing price after/if it closes. Turns out 3 other offers came in that day. I bumped up my offer even more. I'm using a hard money lender to purchase it in order to make my offer stronger by giving it a quick close without any contingencies other than title needs to come back good. It's going to cost me 3 points and a high interest rate. I plan on refinancing asap in order to get a more reasonable deal for the long term. Now I may be all in with closing costs and refinancing well over 205k for this property and I probably am going to have to do a good amount of work to it. If I get lucky and it only needs minimal repairs, even better. The
Now some of you may think I'm crazy for jumping at this blindly. There is a part of me that is crazy taking that gamble. However, even if it needs extensive repair, I now have another 4 units at a reasonable price (Say I need to put 60-80k into it) right next to my 6 family. I don't anticipate having to do that many repairs immediately either because the units are already rented out and I can tackle one project at a time. So that 60-80k will be over a long run and using the rents to do so.
Luckily, I have some experience doing this now at this point. I know what I'm looking for and I understand great deals only come up once in a while. If you're looking to get into investing with something like owner occupied, you will not be able to compete on these houses. You can't only look for amazing deals but need to look for reasonable good deals. There's tons of money to be made out there but sometimes you have to start small and not look at what these big guys are doing. There's obviously other ways like wholesaling and stuff like that where you can get in and make a ton but they do require significantly more work and vast majority of people aren't cut out for it. Be smart in the beginning, not greedy.
