Last week I was able to get rental property number 12 under contract after not buying a rental property since July of 2014. This week I was able to get another rental property under contract! Rental property number 13 is a little different from most of my rental properties, since it is a two unit property and was built in 1920. Last week I described why I am changing my rental property buying criteria, because it has been so hard to buy any properties. Even though this new rental property will be older and is a two unit property, I think it will be a great rental property for many years to come.
What are the details on rental property number 13?
I have not bought this property yet, so I will not disclose the price or specific detail until I have purchased the home. The home was listed for $115,000 a few months ago and went under contract almost immediately. At the time I was not too interested in the home, because it did not meet my strict rental property buying criteria. The home was built in 1920, which is older than all of my rental properties and it is close to the college and could be used for a college rental. I tend to shy away from college rentals due to the increased wear and tear that college students sometimes put a house through. In my market college rentals are usually priced at a premium as are most income properties. There are a lot of investors in Colorado and the going cap rates seem to be around five percent.
This property was priced very well considering it is rented for $1,300 a month and has potential to be rented for even more. The property is an up/down duplex with one unit on the main floor and another unit in the basement. The upstairs unit has two bedrooms and one bath and the basement is one bedroom and one bath, but the basement could easily have two bedrooms. I think the rent could be $1,400 or $1,500 total if the basement unit was converted to a two bedroom. The home may need some maintenance in the future including a new roof and the basement apartment could use some paint and sprucing up.
A couple of weeks ago I saw the home came back on the market. I went to see the home since I had not seen a deal this good in months and made an offer that same day. They received multiple offers on the home and I raised my initial offer, removed my inspection contingency and waited. I heard in a few days they accepted another offer. I was a little bummed, but that same week I got rental property number 12 under contract, which cheered me up. Early this week the listing agent emailed me and said the accepted contract had never sent in their earnest money and backed out. I sent in another offer slightly higher than the offer I made during highest and best and I got it!
It will be nice buying a rental that does not need any immediate work and is already rented. I can collect rent checks as soon as I purchase the home! I will post more details about the property when it closes.
Progress on refinancing rental properties
I want to buy 7 rental properties in 2015 and to do that I will have to either make more money or find some more money for down payments and repairs. I plan to do both and the first part of the plan is to refinance a couple of properties. Rental property number 4 and rental property number 7 have increased in value significantly over the last two years. Both properties have loans below $90,000 and the houses are worth close to $200,000.
I plan to refinance both of those properties and take cash out, which will raise my payments. However, I will still be cash flowing on the properties and the rentals properties I can buy with that cash will more than make up for the increased payments. Borrowing money at less than 4.5 percent and using that money to make at least 15 percent with rentals is the plan. I will only be able to refinance at 75 percent loan to value so I will not be taking on huge risk with this move either.
Invest Four More news and updates
The Invest Four More forum is doing awesome! There is a lot of activity in the forums and some great conversations taking place. Don’t forget we have a contest for the next week or so for the best contributors to the forum. Prizes include a $100 gift card to Amazon, a copy of the Complete Blueprint and free copies of my books! Please stop by the forum and introduce yourself or tell us what you need help with.
In the online real estate world podcast seem to be more and more popular. Just in case I did not have enough going on, I am thinking of starting a podcast. This would not be a show that interviews the top real estate investors like most of the other podcasts, but a show that interviews new or small investors. Learning how they got started, what they need to get started and seeing what can be done to help them be more successful. If you would be interested in a podcast like this, please let me know in the forum!
Today (February 5th) is also my birthday and I am now 36 (you can say happy birthday in the forum). I feel a little old hitting the latter side of 30, but I can’t change my age, no matter how positive I am. For my birthday I am flying to Seattle for one day to visit Cats Exotics where I bought my Lamborghini. They have a Lamborghini Countach as well as a number of other cars I would love to see. I am not buying the Countach, but they are going to let me sit in it to see if I fit and more importantly drive it!
This has been a great start to the year with more rental properties coming on board, flips being sold, new agents being added to our team and the blog is doing great. I have also had more REO listings the start of the year than I have seen in months. I would like to thank everyone who reads, comments, and ultimately encourages me to keep writing. I hope the year keeps going strong and the progress continues!