Hello all,, As you can guess buying my first investment property has been a journey of its own to say the least. Escrow was initially supposed to close October 5th which is my birthday, but here we are 11 days pass that and still not closed! It has been a great learning experience however and though no 2 closings are the same I honestly feel like I’ve learned a lot over the last month or so…
With that being said we are days away from closing which is great… Concessions have been made for things that were caught during the inspection and the seller is paying 2% of my closing costs which is great. At this point I’m just ready to call myself a real estate investor!
Then comes that moment when I think about the fact that this is only the beginning and once this closes I will be a property owner **YIKES** I think about things like if I picked the right property manager out of all the ones I’ve interviewed, fixing the problems discovered during the home inspection, and if my tenants are good tenants to inherit… Then I calm myself down and think you know what I’ll cross that bridge when I get there. There is no need for me to stress over bad things that have not happened yet, but to instead prepare for them just in case they do happen. I know the reason why I purchased this property and will do everything I can to make sure I own a great investment property that I am proud of!
Well guys that’s it for now I’ll have an update coming up when I am officially a real estate investor! See you then (or maybe before ☺).
Hi all! I know it’s been a while since I’ve posted but escrow is moving along with it’s up and downs. Thankfully not too many downs but my feelings are mostly excitement and nerves! 🙂 I have finally got everything squared away with getting an escrow agent, finding a great price on property insurance, received my home inspection and now waiting for the point of sale (POS) inspection to be done. For those who don’t know the POS is done in some cities of Ohio (mostly the suburbs to my knowledge) and it’s basically an inspection for things that the city would like fixed on the transfer of a property to keep the integrity of the neighborhood up.
One of the downs that I have faced was the discrepancies in the leases from what the seller originally stated. The discrepancies aren’t huge I guess it’s just the feeling of wanting everything to be perfect on your first investment property and being shaken up into reality. I mean this is something that happens all the time when you look to purchase a home, it’s a known fact that some landlords and real estate agents for that matter fudge numbers, plain and simple they want to make the sell! This is why they tell you to do your due diligence! This is something that I am going through for the first time and I feel like I’m learning so much already.
My home inspection went well and there were no problems found with the foundation! There were other small things that need to be fixed up and the biggest thing was the furnace all which can be negotiated before the close of escrow. All in all I just wanted to give you guys a quick update on what’s currently going on and will be back soon to let you know the progress!
I’m so excited to let you all know that I am in contract with a duplex! I made my deadline for my goal that I set for myself! Now the work is just beginning… Since this is my first property that I’m purchasing I am just trying to get everything right to make sure it is a smooth transaction…. I can’t believe that I found this property so fast after being really anxious and ready to find a property… Now I know you might think that I jumped into a property fast but this was an actual good deal !!
This property’s rents are lower than market by at least $300. With that being said per my calculations the property will be cash flowing anywhere between $50-100/month which means that when the leases are up and I am able to get the property up to market rents I will be cash flowing at my minimum of $200/unit/month.
This is soooo exciting for me and I am happy to take you all along on the journey with me!! The following few days have really been me getting everything from the closing attorney together to getting property insurance in place. I have also put my property manager in place on the property so things are moving right alone. The closing date is set for my birthday of October 5th, so I’m hoping that’s a good sign that things are meant to be!
Welp I know I forgot to tell you guys this part so let me go back a little bit. I always knew that I wanted to own a business and I finally got to the age that I felt like I can start looking into it. I knew that the people who I seen that were “rich”, “wealthy”, or “financially free” were mostly business owners or at least I thought. I basically knew that they were not the common folk who were working the 9-5 jobs, not even the 9-5’s that had “great pay”. I knew this from an early age and knew this is what I wanted. I also had a great adoration for the medical field and figured I could save some money working as a nurse and then decide what type of business I would like to open up. I was always a creative person in the mind now that I think of it, but not the artsy or talented type, but the type that thought of new businesses or inventions that had yet to be discovered. I thought of things that I thought could make me financially free just didn’t know where to start to make them come to life.
I did what I naturally know best which was go to school! I took a business class at the local community college where I got a beginning taste of business. Not knowing where to go next I decided to look into getting my real estate license since I had the idea of getting it anyways as an investor. To my surprise I learned that there were only 3 classes that I had to take to get this license and be ready to take the test. Being the ambitious person that I am I took 2 of the classes during summer after getting off my full-time job as a nurse then took the final class in the following fall. I then got side-tracked kind of with the investing side while I waited for grades to come in.
I am just now able to take my exam which is really exciting but considering the class ended in December and I still haven’t taken the test I just took an exam prep class over this past weekend which was really helpful! I will soon be scheduling my exam to officially become a real estate agent. My logic behind taking these classes to get my license was actually a few things. First, I didn’t know a damn thing about real estate and decided that this may be a good way to learn the fundamentals of real estate. Second, sense I was going to be an investor if I was able to represent myself on my own deals I could save myself a whole heck of a lot of money instead of hiring an agent. Last, I may be able to work part-time as a real estate agent just to be able to learn more about the game.
Now my plan: bottom line still not sure of it. I will be looking at the jobs to see what is open and options for me as an agent. As far as setting up my own deals I’ll be buying out of state for now so it kind of won’t help me there As far as learning about real estate, I’ve learned a ton! It really gave me great fundamentals that I would still not know if it weren’t for those classes. Things like encroachments and easements are things that I just honestly did not know about prior to taking these classes. I think these things are important for a property owner to know of but especially someone like me who is going to be a real estate professional. My teachers were also great who were also investors and straight up told the class if you don’t use your license to buy the great deals you are wasting it! That made me more confident in the fact that I have yet to meet a real estate teacher of mine who was not also a real estate investor. I guess I just felt like I picked a good thing to get into especially if I do it right! The journey is still pushing forwards all. See you soon!
So now that I am ready to invest I’m having a somewhat hard time finding a rental property that fits my criteria! Ugggh… I am sooo ready! The thing is that it’s not that my criteria is so narrowed down that I’ll never find anything that fits it, its actually that the area that I’m looking in is so competitive if you just so happen to blink as the property hit’s the market when you open your eyes it’s gone! You have to be so quick to seeing the property hit the market, analyzing the value, and putting in your offer before the pros get to it. It’s going to be my first investment property, but I have narrowed down the way I analyze my properties to be most efficient. As I think about it now I can probably do even better putting in an even more efficient system that works.
I knew people said it wouldn’t be easy and I have prepared myself to endure the ups and downs because I have a goal and a plan for myself that I just CAN NOT give up on!!!!!!! But man,, when you want something this bad and it takes longer for you to get it than expected that gives you discipline and when it finally comes I know I will be plenty grateful! Oh, and I just realized I haven’t told you my target market just in case you didn’t already know I plan to invest in my first rental property in the Cleveland, Ohio area.
I picked this area for many different reasons. One being the rent to value ratio, the fact that I don’t have any family out of state that could make it a simple choice, the fact that people are moving there and retaining there, there are lots of up and coming projects to the area amongst a few. Upon visiting the area I see some areas can use a lot of help and I would like to give back to the community.
Bottom line is I want to find my first rental property and find it soon! I will however exercise my patience in the fact that I know I don’t want to rush into a bad property just so that I can have my first rental property.
Thanks for tuning in! See ya soon…
Well if you’ve gotten this far you already know that 1 of the things that put a hold on my real estate investing career was obtaining a loan. Let’s go deeper into why I was first denied. The first time I tried to apply for a mortgage loan for a rental property I was a little under 2 years in my current occupation which is a licensed vocational nurse. I end up through the process finding out that the minimum time lenders require working in the same job field is 2 years. To make things worst getting in to the nursing field is tough in my area and sometimes may require a couple of years working through temp jobs and agencies to gain experience before you can land a stable and benefited position. At the time of my application I had been working full-time at a good hospital, but was in a temporary position and before that was working as an on-call employee. I wasn’t worried about saving money just in case a tenant vacancy because I knew I could always work when I needed to through my on-call positions I still held. In my mind, I basically thought that since I had consistently been making more money than was required to maintain the mortgage and expenses in case of a vacancy that would be taken into account when applying for the loan. Boooy did I find out that I was wrong.
Apparently, it didn’t matter that I could afford the home looking back on my taxes for the last 2 years. The only thing that the lender took into account was the fact that i didn’t have the job history he required to pre-qualify me. I was told that my income couldn’t be used to substitute this requirement because of all the rule changes after the 2008 market crash. After being turned down by this lender I went into a hiatus from the real estate investing world.
Fast forward to a few months ago for whatever reason I decided to look into getting an FHA loan in Sacramento, CA and using it on a duplex. I got in touch with a lender who actually said that she could use my income that I was making even though my current position was on-call. This was music to my ears! I began working with this lender and sent her all my loan docs. After this I kept getting the run around of “I’m getting to your paperwork today”. To make a long story short I never heard from her again which had made me nervous because she had so much personal information. I kept a close watch on my credit!
Finally, deciding to buy property back out of state I went through the scouring the area for a great lender. I explained my situation upfront so I wouldn’t go through the process just to be told no. Some lenders said they couldn’t do it, but finally I found 2 who said yes! I end up applying through both of them to get a competitive rate. I end up getting a competitive rate and different loan amounts on the higher and lower end.
The lessons learned here were to just ask! I now knew what my situation was and knew that I needed to tell people upfront to see if they could work with me or not. There is no need to hide or try and force something on someone because you will just end up with wasted time. People will only do what they are comfortable with and quite frankly some people know more than others! There are loan officers who know about certain programs that may fit people and others that have never even heard of them. So do your research and have an idea in mind of what type of loan(s) you may qualify for. Also, to fully vet the person to not end up with someone like the lady who just stopped calling me.
Just for reference if your strategy to invest in rental property is to get a loan some programs you can look up are the FHA, FHA 203k extension, VA loan, USDA rural housing, and a new 1 I just learned about NACA. Thanks for reading guys!