Life of an Investor

Today I’m going to let you in on the story of how this first purchase is really going for us. Although the financial aspects looked good as you can read about in yesterday’s post, not everything else is quite as rosy. When we first signed the contract, the seller wanted to close within a few weeks. We quickly got a contractor in the property to give us a quote for the rehab, so we could submit this to the bank. The seller did not have a lock box on the property, so required us to schedule with him anytime we needed access for inspections, etc., which was a bit of a pain.

After discovering that our first option for financing dropped out of the deal, we quickly found an alternate option. With the earnest check deposited and a pre-approval letter submitted, we started working towards getting the utilities turned on and the inspection taken care of. We only had a few days left in the inspection period. I called the gas company and due to some previous issues with non-payment, they would only turn on the gas with a personal commitment from me and possibly require a refundable deposit as well. I then contacted the electric/water company. They told me that there were some issues with past payment as well and I needed to go to their office to have them turned on. I drove downtown on a lunch break, signed my name on the waiting list and sat on a bench, bored, for 30 minutes. It only took them 2 minutes to tell me that the owner had to come down there and resolve the issues and that I couldn’t have them turned on at this time. Needless to say, I was frustrated. They could have mentioned that on the phone.

Well, we notified the seller’s agent and they said that the seller was out of town for a while. We were forced to cancel the contract to allow the seller to take care of these issues. Currently we are waiting for a resolution, the latest response being “Slow but sure.” Not reassuring.

Here are a few pros and cons to the property and the deal. I welcome your comments regarding what you’ve heard so far.
Pros

• Amazing Cash Flow Potential
• There is enough room in the budget to use a management company, so it should simplify the filling of the properties.
• The immediate area has been nicely rehabbed, so hopefully values will go up
• The rents are very reasonable for the area, so it should be easy to fill

Cons

• The property is currently vacant, so we will be starting from scratch
• High up-front repair costs and potential definite unknown repairs needed
• Lenders don’t seem to like the area. Although the immediate area is being cleaned up, we can’t say the same about the surrounding area.

Hmm… did you notice that the pros had a lot of hope in them where as the cons are a lot more definite. I guess that’s just the way it goes.

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This entry was posted on Wednesday, May 21st, 2008 at 10:40 am and is filed under Invest:Real Estate. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.