Wednesday, July 28, 2004

I'm Buying a Condo!

For the past few months I have been looking not only for wholesale and lease/option deals, but to get my first buy & hold rental under my belt. I want to start this sooner than later since this is a long-term strategy. Also, I just want to see if I even have the "right stuff" to be a landlord.

I have recently -- last few weeks -- backed off on looking at houses to rent since it was so difficult to find anything that would have positive cash flow with taxes and prices so high right now. So, I have been looking at condos, which also have this problem in some respect, but there are a few good deals. The places I have been looking at that would actually be profitable have been absolute wrecks from the current tenants. It would take a lot of time/money to get them ready to rent. One lady had 12 pets (5 dogs, 7 cats!) and there were holes in the wall, and dubious "modifications" to parts of the condo. Another was literally covered in clothing piles and garbage. I realize that these typically make good deals, and I was considering putting in some low-ball offers -- even though I was unsure of how much more money and time I would have to spend to prep them (I wanted to have them ready to rent prior to Labor Day to catch the "move before school starts" rush)...when suddenly --

I finally found a unit that the owner insisted the tenant ruined, but went to see it anyway. Compared to the others, this place was move-in ready. All of the so-called damage was really just wear-and-tear.  It only needs paint and carpet, and possible a ceiling fan or two. The owners were selling for at least $10K below market price! The bad news was that it was under contract. However, the Realtor had let me know that the contract was about to fall, I made an offer of a few thousand below the asking price and it got accepted. (WooHoo!)

This will be my first buy and hold property -- and my first test as a landlord. I expect to close the end of August.

Cash Flow Problem
I was getting a little nervous right after since the mortgage broker I was working with was trying hard to find me the right loan. Everything she presented to me was good, but not enough to get me positive cash flow contrary to what I had estimated -- more like break-even. So reluctantly, I had to out down 15% instead of 10% and that seemed to make the difference...she was able to find a great loan that gives me more than $100 positive cash flow per month. The bad part is that I now have NO money left to invest in other properties. It looks like I will really be forced to do the no money down deals now

I have to go pick up the Association By-laws later today and drop off the check for the appraiser.


Anonymous Toronto Condominiums said...

Thanks for sharing those things about condo buying. Those information would really help for those who are planning to buy a condo.

Toronto Condominiums

3:16 AM  

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