Lots going on, so I thought I would post a general update on things…
Today is the big day — I’m closing on my first investment property, The Corn House!
Here are some of the other things going on with House #1:
- I finally found a GC who will perform my Scope of Work for a reasonable price. After talking to several high-end remodeling companies, I finally realized that I need to focus my GC search on those contractors who actually perform much of the work themselves, thereby eliminating much of the overhead. In some cases, this will require a bit more management on my part (or on the part of the project manager I will be hiring one day soon), and may also require some hiring of sub-contractors and scheduling for the various interdependencies among them. For this project, though, I found a guy who I really like. He provided me an estimate on a previous house, and I’ve been looking forward to working with him. I’ll have more to say about the rehab portion of this project later, but I’m happy to say that the rehab work should start in the next couple days.
- I spoke with my CPA to figure out the various implications of how I might hold title on this property, and have decided to hold title in the name of my company. While this could cause refi issues down the line, I think this is the best decision.
- I finalized the Landlord Insurance Policy on this house today, and will be paying about $420/year for insurance. Not too bad; I expected more.
- I received the HUD-1 statement from the closing attorney, and I picked up a Cashier’s Check for the cost of the property (I’m paying for this one in cash).
- Tomorrow I plan to finalize all the paperwork with my GC for this house, and before he begins work, I want to walk through the house with a video camera to document the “BEFORE” state of the house. I’m looking forward to the “AFTER” walk-through in a couple weeks. And will post both here on my blog.
Hopefully there are no surprises at closing, and by this afternoon, I’ll have the keys to my new (investment) house!
With all the inspection issues that came up the other day (including finding out that the house is on a septic tank, after the MLS listing said public sewage), I’ve decided that I need to go back to the bank and try to negotiate a lower price on this property. At the current price, I’m not sure I can realize a decent profit, and considering that many of the issues I found could not be recognized until the utilities were turned on, I don’t feel too bad trying to renegotiate.
The question remains, what will I do if the bank refused to budge on the contract price? Will I let this house go or suck it up and buy it knowing that my profits are potentially squeezed a bit? I guess we’ll see what happens.
I finally get the addendums from the selling agent on this house today, and I signed the contract. I’m really looking forward to getting started on this house. The first decision I need to make is whether I want to get it inspected during my due diligence period. While I normally get full inspections during the due diligence period, the bank is going to charge me $300 to turn on the utilities for the inspection! Couple this with the fact that I picked up this property so cheap that there really aren’t any issues that would deter me from closing, and I’m seriously considering not having the inspection.
Of course, I’m sure I’ll wake up tomorrow morning and kick myself for even considering not having an inspection; as long as I’m getting such a good discount on this one, it’s probably worth the $300 extra to get it inspected.