My older brother lives in KC, so it kind of made sense. I wanted to ease into out of state investing and was looking for a property that needed minimal rehab and the numbers still worked.
How I Found It: I found it on realtor.com.
The Timeline: It took me a little more than four months from the time I started working with a realtor until I closed. I found my realtor through a real estate community website called, BiggerPockets. My realtor was awesome in that I would find a house and she, at times, would simply say ‘I drove down the street and didn’t like the vibe so I didn’t even go in. This was the 4th house I offered on. The other three I had offered at or above asking price but was a multiple bid situation.
The Negotiation: The house was listed at $89,000 but had been on the market a while. I offered $83,524 and it was accepted. The house had some structural issues and concerns about water flow on the front lawn toward the house. We went back and forth and settled on the seller giving me $2,400 toward closing. But, my lender told me that I can't receive more than 2% toward closing which meant I ended up getting $1,670.48 toward closing. That sucked but count that as a learning experience.
The Financing: I used a conventional loan with 25% down at 5.375%. If I had put down 20% I would have had an interest rate of 6%.
The Numbers: This time I was more prepared and knew exactly what the numbers would be.
Improving the Numbers: When I bought the house there was a tenant already in place who was paying $850 a month. I used rentometer, craigslist, and Zillow rent and was seeing that $900 was the average rent for this type of home in the area. My property manager was worried that would be to much of an increase and they would leave right before the winter months. We went back and forth and settled on getting to $900 by increasing the rent to $875 with a $25 pet fee.
The Plan Moving Forward: The house has a den area that once the current tenants move out I will convert into a third bedroom and create more livable space in the basement. Once that is done I will try and refinance and pull out some of, but hopefully all, my money from the deal.
Why I did it: First, I wanted to see if I was capable of buying a house without ever seeing it. I actually went to see it a week after I closed but at that point it was already mine. Second, I wanted at least two properties before I bought a single family for myself. Third, it gave me at least $100 of cash flow after expenses. Lastly, it had a den area that will allow for some forced appreciation.
What I learned:
HELLO AND WELCOME!
I'm Jake, a dude interested in personal finance and travel creating the life I choose.
In 5 years I went from living in a basement with Craigslist roommates to paying off 90k of debt, backpacking 3 continents, getting a house for myself and 5 rental units.
Read my story in the about me section.
All photos on the blog are from my travels
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