We Have an Accepted Offer, Folks!
June 12, 2015 Posted by Tyler CruzLast week I wrote about how I was ready to make an offer on a property.
Well, it wasn’t just talk. Nearly 11 months after first deciding to invest in rental properties, I finally decided placed an offer on a property last Monday.
It’s hard to believe it’s been close to a year already! I did a lot of reading during that time and learned a lot though. I also looked at a lot of properties and analyzed the hell out of them, so I now know what the local market is like here when it comes to investment properties.
The cool thing is that even though it took me 11 months to finally pull the trigger, I now have all the hard leg work done with and I could purchase another property tomorrow if I wanted.
Negotiation
So, a major advantage I have as an investor is that I have absolutely no pressure to buy anything. I am looking for a property that will make me money and that works on paper.
Compare this to a person purchasing property for themselves. They likely just sold their home and now need to find a new one in a certain amount of time (unless they want to move in with their parents and put all their stuff in storage). They may also have very specific tastes or needs in a house, such as wanting an office or a pool or an old Victorian house. Or maybe they just want a house in a particular location.
So when negotiating, they are far more likely to “give in” because losing the house would mean having to find another house that meets their very personal criteria.
As an investor, I don’t have to worry about any of that! Going in, I have an exact top price that I will pay for the property because I ran all the numbers on it. Anything below that price is a bonus, and I refuse to pay a penny over the top price I have set.
Sure, some residential buyers may say the same thing, but when it comes down to it, they are very unlikely to walk away from a house they love if they’re only $4,000-$10,000 away from a deal. Whereas for me, I can just walk away and buy another property.
Anyhow, here’s how the negotiations went down:
The average property here has been selling for 97% of the asking price. I ended up getting mine for 96%, so it wasn’t a smoking deal, but I’m quite pleased with it. The market here is a total seller’s market at the moment and I actually ended up getting the place under my “top” price 
My realtor really pushed them hard on the price, which I appreciate. You can see it too… I was really surprised when they dropped $10K on their first counter!
So in the end, the place was listed for quite a while at $429,000 and after a couple of price drops and negotiations, I ended up getting it for an even $400,000.
The next morning, I went to the bank and transferred funds from OpCo to HoldCo, wrote a cheque for the deposit, and dropped it off at my realtor’s agency.
My holding company doesn’t own it yet though. It’s still pending subject removals, namely inspection and financing.
Inspection
I’ve set up a terminix vermont inspection for Thursday, June 18th. Since it’s a duplex, it will take longer than a typical house (4.5 hours).
I’m using the same inspection company that I used for the house I purchased a year and a half ago. Their reputation in my city is ridiculously good, and I’m happy with their performance from last time. Actually, the inspector ended up being an ex-employee of Neverblue. Crazy, eh?
So, I am a little apprehensive of the inspection to be honest. I already expect to have to replace the roof – I have that in my budget. But the house may have some other issues as well… the one side was not renovated very well – it was definitely done by the homeowner and is a bit amateurish. And I know I’ll also need to get outlet repairs by Gator Electric.
It will be interesting how it turns out.
Financing
Dealing with the financing aspect is always a bit of a pain in the ass.
Yesterday, I dropped off a pile of paperwork to my broker including things such as certification of incorporation, notice of assessments, and other financial crap.
This now marks my 3rd mortgage deal working with this broker, and I will have a 4th for her soon enough!
Working with the same broker over time is already proving to show its benefits. For example, she is going to eat the appraisal fee, takes less commission (on commercial deals), and knows my situation which is therefore a lot faster to deal with. And of course, she gets me great rates.
Hopefully there are no hiccups on the financing. The application was sent and is under review. I should have an answer on Monday.
After-Purchase Work
If all the above goes well and the sale goes through, there’s a whole new pile of work for me to do:
- I will likely have to put on a new roof
- I will also have to learn how to lift a glass door properly
- I plan on adding a privacy fence in the back yard to split the yard into 2 separate ones so that each side can enjoy their own yard. We also found a garage door repair in langley here.
- The seller’s took the washer and dryer out of the one side, so I need to buy new ones and have them delivered.
- I also plan on getting Bathroom Renovations North Dublin | Bathroom Design | Bathroom Fitters North Dublin.
- I need to hire a property management company and set all that stuff up. I’ve already done preliminary research on which company to hire, but I haven’t chosen one yet.
Fortunately, both sides of the property are currently vacant, so it will make all the above easy. I also want to do as much as I can while both sides are vacant because it will be a pretty rare opportunity for me to do so!
Stay Tuned!
I can’t wait to have the keys in hand. I plan on showing you photos of the property as well as giving you a detailed video tour of the place as soon as I can!
I can’t wait to collect more properties!
Congrats, Tyler. Both sides vacant, eh? This is a great opportunity. Did you ever watch “Income Property”(it’s a Canadian show). This would be a time to go a little wild over and above the usual “just enough to get it rented” landlord work … make each side exceptional … and then charge accordingly.
I’m sure you’ll keep us posted ..
Yeah I’ve watched the first season or two on Netflix. It’s pretty formulaic though and of course reality TV, some of which are more fake than others, but they are all fake to at least some degree.
I certainly am cognisant of the fact that I have a rare opportunity here though… so maybe I’ll do something apart from the roof and the privacy fence, not sure what though since both units were renovated 7 years ago.
I don’t think a sprinkler system would make sense, and a double garage with separate entrances would likely be not worth it money-wise.
Congratulations Tyler! Although I don’t comment much, I just wanted to say that I’ve been enjoying your posts on your real estate investing adventure over the past year. I’m looking to make my first investment in real estate in the coming months, and your posts have been very educational.
What are you buying?
Woop woop!!!! Congrats bro, this is just the beginning of many new adventures (and more $$$)
Congrats Tyler. As a former landlord, I have experienced a few landlord challenges and it is a relief for me to be out of the game. But you sound like you really have all of your bases covered. From the tax entity, the financials, to hiring a property manager, you have really done your homework. If this proves profitable, you now have everything in place to continue to grow your empire. Well done! I suspect you will build a small empire and make lots of money.
Why not jump back in and this time use a property manager?
Congrats.
The name of the inspector is Ashley maybe?
Nope.
Congrats Tyler!
Congratulations Tyler