For years, I’ve watched the real estate market around my primary and secondary homes. At any one time, I can tell you what’s for sale and what the prices are. Maybe I should have been a realtor because I really enjoy watching the market. I’ve often thought about picking up an investment property to rent out so that might factor in to why I watch things so closely.
A couple of weeks ago I was taking a quick look online to see what was for sale and what had sold in the last week or so when I discovered that a one story rambler that I’d seen online for months had dropped their price from $185,000 to $130,000. I couldn’t believe it. This house is located in a cul-de-sac and was in reasonably good shape. It had a two car garage and was a 3 bedroom 2 bath configuration with a newer roof. The best part is that it’s located about 3 blocks from our house. Frankly, I was shocked at the price. I did some quick calculations and realized that with 20% down, I could be cash flow positive to the tune of about $400 a month once I had a renter in the house.
After the initial excitement wore off, I sprang in to action. I went online to my local credit union and applied for a mortgage loan (no cost to get a pre-approval letter) and called a local realtor that a friend referred to me. Within hours I had an appointment to check out the house and had an approval letter in hand. I thought for sure this was going to happen but was nervous that the price was so low I’d have lots of competition.
I met the realtor at the house around 2:30 that day. She had done some more research for me in the couple hours before we met. I had assumed that the house was bank owned and they were simply trying to get rid of it after sitting on it for quite some time. I’ve seen that happen a bunch of times in the area so I was surprised to find out it was actually a short sale. Even worse, the price that the seller had lowered the price to was not bank approved and by the time I got there they already had an offer in writing and they said they weren’t accepting any back up offers. (Really? strange!). Once I realized that the ridiculously low price had not been approved by the bank, I told the realtor that I wasn’t interested. In my mind, there’s no way the bank will take that offer. They don’t even need to know the market that well in the area to know they could dump the house just as quick at $155 or $160K. The fact that they weren’t accepting backup offers and they had lowered the price so much, led me to suspect that they were just trying to see if they could get a family member to buy the house at a huge discount. I don’t know if that’s really the case but I’m watching the listing to see whether it goes back up in price, or whether it really does sell for that price.
Now that I have a preapproval letter and a realtor keeping an eye out for similar deals, it’s very possible we’ll leap in to owning an investment property, although I’ve told myself I’m going to wait for the RIGHT deal as opposed to the first thing that comes along in our price range. The reality is that there is a bunch of junk out there right now that could easily become a major headache for me with repairs etc.
ross says
I’m really interested in real estate even though i work in an unrelated industry. But i always watch the homes in my local area and know what homes are currently selling for. I got my 1st house a couple years ago and got an amazing deal, because i really knew the area and jumped on an offer as soon as it became available. It was an REO and the bank had me sign a contract that was borderline illegal (or so my brother who does commercial real estate tells me). But after 2 years the comps in the area are up 100k from what i bought it for.
I think its really important to get to know a certain area that you are interested in. So when something good pops up, youre ready