My 2nd Property (2002)

Almost 6 months passed until I decided to pursue another investment property. Not necessarily because I wasn't looking, but nothing seemed to jump out. Then I stumbled across a decent looking foreclosure on the mls. It was a 2 bedroom (had a 3rd bedroom sort of) house on a decent street in an improving area. There were some long time owner occupied homes around it, which contributed to the quietness of the street relative to others around it. Probably what scared people off the most was that it backed up to government housing projects on other side of the alley behind it.

They were asking $49,000 for the house. After an inspection with the listing agent, I offered $37,000. They countered back at $45,000, and I rejected it and held to my offer. For a couple months I sat back and bought nothing else. But then I noticed that same house was still for sale, except that they had lowered the price to $43,000 now...interesting?

I called the agent back and told him to resubmit my offer of $37K, and he did. This time they accepted it. Nothing changed from two months prior, other than the bank must have decided they just needed it sold. This time, I got conventional financial through Wells Fargo, I bank that has always been good to me. I put down 10% and got a fixed rate 30 year loan, but it had PMI on it. This would end up being the last time I used a "traditional" lender. While everything went fine, I resented the PMI and having to put money down.

The house needed a little repair, so I hired up a handyman I found on the internet. With no experience rehabbing, I learned a couple lessons. The first is to check out references and quality of prior work. The second is to always get 3 quotes. For about $2500 labor, he painted the interior, installed carpet, tiled around the fireplace, cleared brush and overgrowth from the yard, fixed some leaks around the porch roof, and a few other smaller items. He was supposed to fix a railing on the staircase, but since I paid him before this was done, it never got completed--third lesson.

All told, it wasn't really a bad deal, but the quality of work was below average. Rachel and I spent a weekend cleaning up the kitchen and putting up blinds and a couple things like that. I had a new stove and refrigerator delivered and it as ready to go.

Since I had a full time job, I decided to hire a property manager for this one too. I basically took the first one that called me back. She had a hard time renting it for the $600 I was targeting, so after a couple months of vacancy, I had it lowered to $495 and it rented in a week. Since then, it has really been pretty easy to keep rented, so I think the market in that area finally caught up with my expectations.

The house is now worth at least $50,000 as-is, an appraisal says more--but I don't beleive it. If I put $6,000 int0 updating cosmetically, it would probably bring $70,000+ for it. I have attached a picture as the property looked when I bought it, still basically the same today from the outside.

"Only buy at your price, never fall in love (with a house that is!)"