It’s no secret that I like real estate. I think owning investment property is a great way to build wealth and create semi-passive income. You get to enjoy growing equity and increasing property value over time, all while someone else pays the mortgage. What’s not to like?
Well, plenty. We made a bad decision in trying to flip a house a couple of years ago, and had a huge repair bill on one of our rentals this year, which negated any profits. Still, we are in this for the long haul, and like something out of a HGTV episode, we recently found a deal and bought a fourplex! Here is the story.
Not A Good Realtor To Be Found
As you might remember, Jim and I have looked at a few potential rentals over the past year, or rather, I look and he says, “OK” as he does not share my love of the hunt. Anyway, after the bad flip deal, I was a bit sour on our realtor and decided to find someone new.
The problem was that they all sucked. I thought I had a good one who actually showed me a few properties at the end of last year. I didn’t see anything that sang to me, and she promised to send updates when something new came available. I never heard from her again.
I put off looking for a while after we bought our commercial building. Earlier this summer I got the bug again and called two realtors about various properties that were on MLS or that I noticed while driving. Neither property worked out, but I told both realtors what we were looking for and asked them to notify me if they found listings that matched our criteria. Never heard back from either one.
I realize there are lots of looky loos who want to see everything and never buy, but come on. We are good buyers and ready to jump if the right place appears.
Being Klutzy Can Be An Advantage
A few weeks ago, I had to get my oil changed. Because
I can be cheap my time is valuable, I went to Jiffy Lube, only to be told there was at least a 30 minute wait. Since I had a coupon, I decided to stay, but I’m terrible about sitting around. I had my work out clothes on because I was headed to the gym later, so I decided to go for a run while waiting on my car.
What does this have to do with rental property? Well, since I was jogging in a place I don’t normally jog, I tripped over a crack in the sidewalk and did a full on yard sale right in front of a lady walking her dog. Not my finest moment, but I hopped back up and tried hide my embarrassment while blood was coming out of both knees and palms.
Because I had to
limp walk to recover from my spill, I noticed a for sale sign on an older, historic home in a perfect location, actually on the premier street in our town. The sign said it had four units and a new price.
Out of curiosity, I called the realty office that was on the sign to find out about that new price. I spoke with a realtor who wanted my email to send information about the property. Big mistake. I got 3-5 pushy emails a day from her over the next week wanting me to sign a contract making her my exclusive agent. All this from a 30 second conversation. I wanted more action, but this was over the top. I do not like to be pressured into anything.
I Really Have To Find A Realtor
Since I was batting 0 at realtors, I decided to feel out our previous one. I sent her a brief email that said something like,
“I hope you’re doing well. Even though our last project did not end as planned, I’m glad you were able to finish it. We are thinking of adding a new rental property before the end of the year. Would you be interested in helping with that?”
Right away, I got a positive reply and we had a showing scheduled for the fourplex. It felt like coming home.
I was a little annoyed when the owner turned up for the showing, but it turned into our lucky day. We got the back story on the property. Her grandpa built the house in the early 30’s and made the main house into an upper and lower apartment when his children left home. He also built another two unit building at the back of the property. It currently has an apartment on the upper floor and a commercial space at ground level.
The place is now owed by two sisters. One of them retired recently, and the other one, who was showing us the house, really wanted to join sis in retired bliss. All the tenants were new hires she ran into from her work at the sheriff’s department. They were all on month to month leases and paying really low rents because she felt sorry for their entry level salaries.
My realtor asked if it was hard to sell the house, meaning emotionally. Instead she answered that they had seen very little interest and she was more than anxious to see it gone.
With that information and the fact that the house had been on the market for over 400 days, we decided to throw in a low ball offer. The place was listed at $222,500 after a recent $5000 price drop. The property started at $249K over a year ago.
We offered $170,000 subject to inspection. The sellers countered at $190,000. We countered back at $185k, and they accepted. Real estate in Southwest Colorado is an amazing deal! It was almost too easy.
If we hadn’t spoken with the owner and gotten the feeling they were done, I don’t think we would have started so low. We were willing to top out at $200K, so I think we got a steal.
It is a big property and much more than we thought we’d be buying at this stage of the game. With the price, rental potential, and location, we couldn’t pass it up. I wondered why someone didn’t jump before us, and I’ll share my opinion in a later post, but we should be able to cash flow at least $500 a month if all goes as projected. The inspection turned out well and the sellers are fixing some of the electrical issues before we close. I’m sure we’ll hit a snag somewhere, but so far, the process is moving along like gangbusters, and we are set to close in a few weeks.
This house also solves a future dilemma because we could easily move into the main house after we’ve done our retirement nomading. We won’t restore it to it’s former glory for tenants, but someday we will do that either to list it or to live in.
This post is already too long, but it’s exciting to almost be a four plex owner, even if I literally stumbled into it. I’m sure it won’t all be roses, but I’ll keep you updated as we continue to build our rental property empire:)
Have you fallen into anything good lately? How would you feel about having a multi-unit property? Can this count for a month of wealth building on my Health and Wealth challenge?