Thursday, September 27, 2012

apartment hunting...


That's what my husband calls it.  I guess that is what they must call it in Europe.  They are so cute with their words, aren't they?  They also call the backyard a "garden".  I like it!

After my cousin from Belgium visited this summer and it was revealed that she and her husband own 20 or more "apartments", a couple of buildings in their city, a couple of shoe stores, some parking structures and a giant pig and potato farm...she's only 10 years older than me.

This must have gotten Jerome thinking.  Because late June he announced to me that we should look into buying an "apartment" to rent out.  Something small enough that when people move out, it won't take us months to turn it around and get another tenant in.  And by apartment, he means a condo...not a detached, but an attached so that it won't require outdoor maintenance.

To me, this is an interesting request as I have always been under the impression that we will be moving to Europe...someday...but it was always within "two years".  So, this was a little out of left field for me, but I'm down with it.  I rarely give him a hard time when he considers something because I know that he has thought about it a lot before he mentions it and may have even done some research.  I'm more of the spontaneous type, for instance becoming a feral cat care-giver, TNR'r and kitten socializer.

Well, anyway, the prices for "apartments" are still pretty low and affordable ~ but we found out in this process that we are really a year late for the really good deals.  Condos such as the ones we were looking into were going for $15,000-$20,000 last year.  So, again, we missed the boat.  But this is also a good sign, is it not?  Housing prices are rising :).

We started our search at the beginning of July after I had gotten in touch with our realtor.

After looking at 15 or 18 condos, all different sizes, locations, types...we were serious about four of them, but the first two that we were going to put an offer on, we were told that the current owner took it off the market because he was going to rent it out for himself.  Bummer.

A little side story...one of the condos we looked at was in the same complex where our old tenant (that we had to ask to move out) had moved to.  We would have been serious about placing an offer on this condo until we found out that our old tenant not only lived in this complex, but her condo shared a wall with the one that we were looking at.  This wouldn't work out for us as we would continually be running into her and with the fact that she still owes us money for damages, this would have been a real thorn in our side.

We then found one that was just kinda awesome.  I would consider moving there myself.  We had to wait 14 days from the time it was listed because it was under the HomePath, which at first only looks for people who are buying it for themselves to live in, not investors.  We waited.  There were no offers, so we offered what was from what we had been seeing, Market Value...or maybe a little less.  They countered, but only came down from their original price by $900.  I guess that was a sign that we went too low with our first offer and offended them.  So we came up quite a bit, but then we were informed that there was now another offer on the table and that they would need our biggest and best offer.  We didn't go up much more because it really was already way above what all the other condos were going for and...they rejected our offer. boo-hoo :'(. 

The day we had seen this fantastic condo, we also saw a couple others that were interesting.  One already had renters.  That was the one that Jerome was really interested in because that would mean immediate income without trying to find a renter.  So, we moved on and put an offer in on that one.  They countered with a nice counter; they came down more than $5000!  So, that was pretty good and we accepted, contingent on what the inspection and condo by-laws had to say.

This past Monday we had the inspection and mostly everything was sufficient.  The only things that got dinged were things that we had noticed already ~ the AC was old (original for 1980) and not hooked up/not working and the balcony looked like it needed some fixing.  We had a chance to look at the by-laws while the inspection was taking place and it stated that the balcony needed to have a black metal railing, which this one did not.  So that would be an additional cost.  Then as we were just finishing up, the current tenants showed up.  This was good because we could inform them that we were buying this as an investment and we would like them to stay if they were interested; which they were.  They told us all about the current owner and how she was not a landlord; she wasn't taking care of anything that was going wrong, for instance the balcony.  Apparently there were bees living under the decking, so much that there was a ton of honey just dripping down the wall...the exterminator that the tenants called took care of that, but the balcony really needed to be replaced.  It was not up to code.

We went back home and decided to try one more time to get a lower selling price, but it was denied.  The current owner owes the mortgage, she owes the HOA back fees, she owes several years in back property taxes, there is some sort of "assessment" on the property that she has to pay off, so she really couldn't come down any further.  She also stated that she had the balcony fixed ~ but she must know that it was not fixed properly.

So, knowing all the facts, we went for it anyway and our closing is tomorrow afternoon.  We hope it was the right thing for us to do.  The tenants seem "together", so we're not worried about them.  We have a company out there to give us an estimate on the balcony and we still haven't heard how much a tear off and rebuild will cost...hopefully it's not too much, but in reality, this 2 bedroom condo with a garage is costing us nearly half the amount it did for our garage rebuild back in 2009.

With the rent at what it is currently (which we told them we would keep it the same for the first year), and after taxes, insurance and HOA fees, we hope to see a return on our investment in just over six years.

By the way, over the weekend we did our bi-annual inspection on our other rental (we call 251) and we were very pleased.  He has a new girlfriend living with him and the place looks very cute, nicely decorated and clean, clean, clean!

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