All Forum Posts by: Troy Pugeda

Hi - I was hoping to heed some advice from some of the amazing folks here.

I am in the process of buying my 2nd property in Birmingham (Center Point). The listing says "Turn Key" and was Posted for $119K. I offered $107K and it was accepted. Now upon actually visiting the property (flew to BHM) and getting an inspection, there were quite a few issues:

1) strong mildew smell. Inspector says the home was just not getting proper air flow ? 

2) half the outlets don't have GFCI

3) need to have the ceiling checked for Asbestos

4) minor water leak between the car port and wall of the house. 

The house has been on the market for 200 days. Per the listing agent it was because the previous buyer's financing fell through.

My agent doesnt think I should proceed in purchasing this as she believes it needs a lot of repairs and is in an overall not in a good neighborhood. She also states I may spend much more repairing it.

My potential Property Manager on the other hand feels confident that he can rent it out. Basically just close the deal and hand him the keys and he will take care of everything. The repairs are minor. This PM was recommended by another investor.

I decided to counter offer for $95K. But at this point, should I take this deal and risk it ? Thoughts ? 

I'm actually in Birmingham right now buying my 2nd Property by Center Point (class B/C neighborhood but with a strong rental background).

My advice for you are the following:

1) if you can - find time to physically visit Birmingham. It'll help you better understand the different neighborhoods and why some cash flow and some don't. Pictures won't do it. You need to physically see the property to make your own judgement. 

I went to visit a "Turn Key" property that was apparently rent ready, per the listing. However, upon actually visiting it, there was a strong odor that resonated around the home. Potential mildew or water damage. 

2) Pay for an Inspection report prior to the Appraisal. A full one. I paid a flat $500. I know someone if you are interested.

3) Property Managers are a huge hit or miss. Go for the mom and pop Property Managers. If you do purchase in C/D neighborhoods with a strong rental history, be prepped that some tenants may skip paying rent and will "illegally sub-lease" to other tenants. It happens. Make sure your PM is on top of this. 

4) Diversify your portfolio around Birmingham if you can. Not just in one Municipality/neighborhood. This breaks leverage. I plan to purchase my 3rd and so forth at Roebuck/Trussville or maybe even spend more down south by Homewood.

Good luck !