Move Quickly and Get a Pre-purchase Estimate
Since our offer fell through on the duplex, we’ve looked at two more properties.
One was a four-plex on a main road in our target area. We haven’t even considered a four-plex but it was a bank owned foreclosure and in our price range. This place was HUGE and while three of the units didn’t look half bad, the fourth and largest unit was a mess.
I’m talking water damage, uneven floors, holes in every wall. It would have been a total gut. We dragged our feet for awhile on this one.
Amateur move, I know.
We reached out to our realtor to make an appointment to see it again before making an offer and it went under contract that same day.
I should have known better. But we waited too long and lost it.
Lesson- Move quickly!
The second property was a duplex in a more residential part of town. Two bedrooms plus den with one bath on the first floor and a one bedroom/one bath on the second.
Since we lost the last property from moving too slow, we stepped up the pace with this one. We saw the property with our realtor on a Thursday and were pretty confident we’d be putting an offer in. We just had to figure out how much. We went home and spent the night digging through J Scotts book on Estimating Rehab Costs.
We came up with an estimate of around 60k. Being a larger rehab then we were expecting for our first investment property, we scheduled another visit for a few days later with a contractor friend. While J Scott’s book was VERY helpful on giving us estimates for certain repair items, seriously, pick this book up if you haven’t already, there were just some repairs items we didn’t even notice or think about the first time around.
But when we brought our contractor by the property, he gave us an estimate of over 100k.
One hundred thousand dollars!
We certainly didn’t have that type of cash for a renovation and the numbers didn’t work to add that into a mortgage renovation loan like HomeStyle or 203k so we decided to pass.
Lesson- Get a pre-purchase estimate from a professional.
Fortunately thus far, the lessons we’re learning haven’t cost us anything. But with each property tour, each offer, and each analysis, we’re taking away a few nuggets of knowledge preparing us for the next one.