My adventure into investment properties began in 2012. I was working a full-time job in corporate sales, had landed one large sale and had more lined up. I had wanted to live in Florida for a while, and since I would be earning large commission checks coming my way, this seemed like the perfect time to buy my new home. I could change my residency from Montana to Florida (which has no state income tax), get a great tax break on another home and escape winter. It all seemed perfect!
I started out looking at single family homes and condos in locations I thought might interest me in the Tampa Bay area since I had traveled there many times before for work. My budget was around $200k. I would use 20% down and finance the rest with a traditional mortgage. At the time, both real estate prices in Florida and mortgage rates were incredibly low.
Let me be clear. I really didn’t know what I was doing buying real estate so far away. Since I was more than 2,000 miles away and traveling for work in between, I would peruse Realtor.com for listings and then “drive” through the neighborhoods using Google maps. I found a single family home I really liked. It was near a park, under budget and close to downtown. Unfortunately, I found out the place was under contract. I decided that the best thing to do was to travel to the Tampa Bay area, look at houses and see what I could find.
I started with a condo in Ybor City in the Tampa area. Ybor is know as the Cuban district, one the oldest communities in Tampa. It has a reputation as being a party place and a bit rough around the edges. The condo was worn out looking and I didn’t like it when I saw it in person. I decided that maybe I should take a different tact. I had always wanted to be a real estate investor. Why not buy a home that I could also rent?
The next day, the Realtor and I met to look at houses across the bay in St. Petersburg to look at multi-family homes. We saw a couple of duplexes and a four-plex. I absolutely loved the four-plex. The property was near the first property I liked, near downtown. Plus I loved the thought of the three units covering the mortgage payment, taxes and insurance. That would mean I’d get my 2,000 square foot apartment without any payments! There was only one problem. It was October and I wouldn’t have my down payment until my large sales contract was finalized by the client and my commission paid. This meant I’d have to wait until February. But I wanted to move down to Florida by January so I could escape the Montana winters.
LESSON #1: ASK FOR WHAT YOU WANT
The house had been on the market for a while and had recently undergone a rate reduction. I proposed to my Realtor that I make an offer on the property and ask for a delayed closing. When we pitched the offer to the listing agent, she said her seller wouldn’t go for that. I had met the seller, Judi, when I saw the house. Judi had put her email address on a sales flyer and invited me to ask any questions. So, I pitched my offer to her and she said she would consider it under specific terms.
- Deposit around $5,000 that I would forfeit if I did not close
- They would vacate by December 31
- 3 month lease on entire building of $3,175 and I take care of any required maintenance – I would be the landlord. I would collect rent from 3 apartments and bring in $1,875 — my rent upstairs would be $1300 for a total of $3,175
- Closing on April 5th – we are leaving for a month on the 7th and would have to fly back here for the closing – we could to do it long distance before that date
LESSON #2: TERMS OF THE DEAL MATTER–A LOT
In hindsight, it wasn’t the best deal for me. I was paying rent AND was responsible for rent collection and maintenance. I wanted the house too much. After two weeks of back-and-forth negotiations and agreeing to terms, we had a contract written and in front of Judi and her husband. Then Judi dropped a bombshell. She had multiple offers now on the table. And Judi and her husband were going to move forward with an offer that could close by December. I was devastated.
LESON #3: YOU ONLY HAVE A DEAL WHEN YOU HAVE A SIGNED CONTRACT
I had wasted a lot of time on this property only to have it snatched away. Meanwhile, I had a trip to Australia planned and wouldn’t have time to return to Florida until after the first of the year. But then there was a plot twist. The other buyers had backed out of the agreement and now she was going to offer the property to me under the original terms! Paperwork was sent via email and I signed and faxed back while I was on vacation in Australia. Woohoo! I was so thrilled!
The challenge was now behind me–or so I thought. Over the coming months, I would realize that the difficult times were only just beginning.
Read here for Part 2 of the story!