Money Makes Money

7/12/2007 - With the contract in place, the next step was getting a mortgage loan for the property. Again, I chose to make it easy and use someone that I used previously for a primary residence mortgage. I even re-financed with them in the last few months so I figured I was pretty fresh in their computers. I got set up with a locked in rate at their main office and was given a local branch to the property for my financing and any questions and steps along the way. The branch was one county over, but after driving through six counties just to get to this town, I figured they were backyard neighbors. I got set up with a nice lady who would remind you of a Sunday morning waitress at a Perkin's or a bank teller. From the get go, I was told my process would be very easy and I would be able to close by the first of August, or shortly thereafter. Now this was exciting. I'd be a property owner with 23-30 days pro rated rent and a mortgage not due for two months. What a way to start off!
The lock in rate was a little high. But that is how it is with investment properties. There are no set rates to check in the daily paper. You are at the bank's mercy.

Lawyer Up

7/10/2007- An important lesson I learned early on was to have a real estate attorney in place before you sign the contract. You are eager to move the process along, but no one in their right mind reads every word on a 5-9 page contract. That job is left up to trained eyes. Eyes that have seen thousands of contracts and can spot a problem with a glance at the page. Another important thing to have accompany the contract are the rental agreements of the tenants. My attorney was a little disappointed that I didn't fax him the contract before I signed. For starters, there wasn't an inspection clause. I thought there was. There wasn't. I thought there was. There wasn't.
My lawyer is local, to me. This town and property are way out of his area, but he agreed to do so. It will cost me extra, but I used him in the past, so I trust him. He requested as part of the agreement:

• The rental contracts
• Tenant history
• Title work
• Tax information

The seller was surprised I wanted an inspection. From a previous experience, I found that inspections are the best money you will ever spend in buying a house. A property I put earnest money down on a few years ago turned out to be termite infested and damaged. The main beam of the house was like a sponge.
I agreed to move forward without the inspection. A decision I hope I will not regret. The property is only 80 years old.

Offer Offered. Offer Accepted.

7/7/2007 - I first found the property through the agent showing me a variety of other properties in the area. Some were too small, too expensive, too dilapidated, tenants weren't the best, rent was too low, location was bad, and so on. Any reason not to buy a property was my reason.
The agent had a property he was about to put on the market. It was a duplex with both sides rented at the time. For what he was selling it for, what it was worth, and what the rents were at added up nicely. I would have a monthly cash flow from the moment I signed. He let me go to crunch numbers and I told him I'd get back to him. I had just driven 300 miles from a vacation home and still had more than 100 to go.
The following Monday, I put in an offer that matched his price. There wasn't much to haggle with. It was a good price, he had made a profit, and he was going to help me along the way. He had said that the one tenant was leaving while the other had just started their lease. He faxed me over the contract which I signed. The easy part was officially over.

Toe in the Water

This is the current and ongoing story of an urban guy trying to make it in the rural housing market. Names, institutions, and towns will be changed to protect identities and future investments. My story is very simple: I hate my current career and want to start a new one. One that I can be my own boss and see a difference made by my own hands and mind. I've chosen the areas after what I feel is extensive research and have chosen what I want to do by what I haven't seen others do.
The process of buying an income property can be easy, if you know what to expect, and how patient you are. Since several of the entries will be dated incorrectly, the title will be on or about the date of each step in the buying process. As of this writing, the keys are not yet in my hand.