Thread: Bought my first House!

Hi all,

As most/some of you may know, I am extremely interested in the world of real estate. I am doing my own commercial ventures for rentals but also, in the process, of buying a place for my girlfriend. She has some money built up and I have successfully helped her negotiate, what I think is, a great deal! If she is living there, of course...

A few details:
2 bed/2 full bath Downtown Nashville Condo
One of the last units of the development
Listed for $210,000
We ended up wrapping it up for 185K, 5K towards closing costs, 1K towards appliances, and a storage unit across the hall.
We made a concession to close very quickly, before April 15th (tax day!)
These units comp for 220 (conservatively) and rent out for 1300 (conservatively). Her payment including EVERYTHING (PITI and HOA, not utilities) is $1072/month. She landed a 5.125% (because of an old doctors bill), 30yr fixed.

I am pretty pumped about the deal that we got. Not the BEST, but from a homeowners persepective, it is exactly what she wanted for way less than what she was willing to pay. Just wanted to update you guys as to my activity! Closing in 2 weeks...let's get to work!!

Best,
Josh

This will be her primary residence for at least a year. She is looking to move to DC for a job, but it is not a priority. Worst case...it is her primary for a few years. If it were strictly an investment, I would not have let her do it for anything over 180K...but she had an emotional attachment and I wanted to get her the best deal possible that COULD be rented, if it HAD to be.

Forgot to mention: 1080 Sq ft. Flat, smack in between Downtown and Germantown. Total of 5 blocks between the two. (Germantown is a neighborhood on the end cycle of "up and coming", houses selling there for 500++)

Advice/comments/criticism always welcome!

-Josh

Hey Josh,

Would she mind having a roommate (female of course for your comfort)? Why not let half the mortgage pay itself? You guys are still young where you can deal with having roommates. Get her a roommate WTP $600-700 (since the area comps at $1300 for a single renter, you can come up with some creative marketing by having a lower price than the competition.) Your girlfriend's rent would be as low as $371 if you can find someone to pay $700.

You can make some capital improvements to the place while she lives there, and when your ready to sell in a year or two (hopefully you can wait till the market is on the upswing), you can make a nice profit.

Put the money from the sale down on a couple new properties through a 1031 exchange and now you have two! One to live in, one to rent. Cash out refi the rental property and pick up another.

I would go down a little bit different path, but that is because we are in different kinds of real estate. I'm not sure what your long term plans are.

Just my .02 !

-Alex

Thanks, G, for the advice. That is definitely what she will be doing on down the road. As for myself, my plan is much, much different. I am going to make a career out of RE investing. I just wanted to share the first deal that I played a major role in. She didn't want to use an agent and wanted me to see if I could find her a deal. She gave specs and I went to work! Found a decent deal at about 88% of asking (not including 10K of closing costs, storage, appliances, etc.). It was a great first negotiating experience. I found out what the seller wanted (higher purchase price to conserve comps and quick close), expressed what we needed (will work with higher purchase price if he waive our upfront cost...cover closing, get a storage unit for free usually 5K, 1K for appliances, extra parking spot and quick close only if we can get a preferred lender to give us a sweet deal) and we met at a good middle point for my buyer and the seller. Seller said he would take care of the lending, if we can follow through and get everything in to them fast. Got a 5.125, 30 yr fixed.

Best part about it is that it was not a conflict/confrontation at all. I think negotiating has a bad connotation associated with it. I sat down with the seller's agent, we talked, and we came to an agreement. That simple.

As for the roommate bit, G, we are actually planning on moving in together. I know, I know what you are all going to say, but we have actually been living together since January and we love it. She isn't looking for a property for a RE business...she just wants something fairly stable that her money can sit in, besides the stock market.

Best,
Josh

So, would the rent cover property taxes and expenses (advertising, repairs, utilities etc) in the event of becoming a rental?

Congratulations! Action is not everything but it's a huge part.

Yes, rent would definitely cover everything. It could rent for 1200 everyday, easy. I saw a large one bedroom in our complex that just rented for 1200. With the payment at 1080, that includes everything due, but with the extra 100 from the 1200, it would easily cover all admin/advert/etc. expenses.

-Josh

Good for you, but your celebrating to early it hasn't closed yet. In real estate its not over until the money is in the bank.

Definitely correct, Hatteras. I will keep you all updated on how the closing goes. Inspection was today and a couple things need to be fixed to pass, even though it is a newer condo. Water heater needs to be tested and paint on the outside of the windows is chipping, needs repainting. We will get this fixed, I am sure, or get an allowance for the painting and check the water heater. I'll keep all updated!

Best,
Josh

How old is the water heater? What is it? Gas? Electric?

Brand new and Electric. Never been turned on, that is why the inspector made a note for our final walkthrough.

Thats good. Why was it off is the place vacant? Or did they just finish installing it as you guys showed up?

It has been vacant but only because it is new construction and is the second to last unit in the development to be sold. Was finished in January