I know my original plan was to wait until I had, like, 10-12k saved up before delving into the world of investment real estate, but I’ve kinda sorta thrown that whole idea out the metaphorical window…
…of the house I literally just put an offer in on, like, ten minutes ago.
…also I may or may not have taken out a personal loan in the amount of $19,000 to buy it.
Okay, I’ll explain: the house is fairly close to my own, about two or three streets away, really. 3 bedrooms, 2 bathrooms (well, the basement bathroom needs work but it is a bathroom), and literally two doors down from a Family Dollar. Me, being the perfect specimen of “pure patience” that I am, thought — “Hey! Why the hell not. Let’s do this!”
I’m honestly SUPER nervous about everything, though. Like, I feel a little nauseous. Then again this is the first time I’m really doing this, so it makes sense — and the numbers look good, so I really shouldn’t be too stressed. I’m just a worrier.
Now, for the juicy bits.
The asking price on the home is $21,900, and I put in an offer for $15,000. The place needs a little bit of work — mostly landscaping and paint — but it’s manageable. Rents around this area, for a home such as this, range anywhere from $500-600. Probably $550, just to be safe, although my buyer’s agent thinks I can get $600. Last year’s taxes were $671, and I’d guesstimate that insurance runs about $800. I’m conservative with my numbers, though, so I like to say $1050 and $1050 for taxes and insurance (better safe than sorry). With those numbers, including 10% for vacancy and about 5% for repairs, that’s still a bit above $200 in cash flow per month.
After I dump the $19,000 personal loan at 12.99% interest and refinance the place.
The plan was to buy the house in cash, not using my own money, and then take out a 75% LTV mortgage on the home immediately, but finding a bank that doesn’t have a 6 month seasoning period is a bit tough. I’ve got a few leads, though, from family friends, which I’ll be getting in touch with on Monday. But worse case scenario, I’m stuck with the place for 6 months with an insanely high monthly payment… I’ll still break even if I can rent out the place ASAP and charge $550.
There’s another option I’ve been looking into that’ll let me taking out a mortgage as soon as Day 1, but I can only get the amount I paid for the house. Still, I think that might be worth it. Whatever, we’ll see what happens.
For now, I’ll be quietly flipping my shit as I wonder whether or not my offer was accepted. I’ll keep the blog updated with the news when I hear it!
NP.
Neurotic Finance 