During our search for a rental property, some properties we thought we missed out on have resurfaced on the market.
We recently got on the trail of another house in our search for a rental property we want to purchase with some friends, who are first-time real estate investors. We also revisited an old friend, the first house we saw but missed out on.
We are looking for a single-family house for between $350,000 and $370,000, which we should be able to rent at our target of $2,000 to $2,100 per month.
The first house we saw has three bedrooms and two baths but needs quite a bit of cosmetic work and a new roof in the near future. Priced at $350,000, it received multiple offers and sold within a few hours at above the asking price.
Our Realtor received a call a couple weeks later that the seller was frustrated with the buyers, who were asking for a new roof, among other concessions despite agreeing to an as-is sale.
This is not uncommon. Either the buyers were having second thoughts about the cost of fixing up the house or they were angling to get the price lowered after outbidding everyone. We said we’d agree to the original asking price with no contingencies, having already seen the property.
The sellers informed the buyers that they were canceling the sale unless they fulfilled the original agreement by the next day. The sellers’ agent approached us because we asked her to let us know if the deal fell through. Unlike most of the other offers, we were coming in with 20 percent down, which made us more appealing.
This was a great turn of events for us because I believed this property was a great deal for the price. Unfortunately, after the sellers gave the buyers the ultimatum and told them they had a back-up offer they were ready to accept, the buyers fulfilled their part of the contract and the house stayed in escrow. We left our offer on the table as the back-up because if the first offers hits a bump again, we’ll be ready to move.
Another house came on the market that we decided to take a look at. It was a bank-owned foreclosure in a neighborhood where we once owned a rental house and we like it. In fact, it was the same basic floor plan. To give you an idea of how crazy the Southern California real estate market got, we purchased that model in 1999 for $205,000 and sold it in 2006 for $600,000. Now, the bank has set an asking price of $359,000.
The house is a two story home with four bedrooms and two and a half baths. The previous owners had done some nice work and it is in really great condition. It even has a relatively new pool with an attached spa. It especially has great curb appeal and I knew it was unlikely we’d be able to get the house for anything near the asking price, which would make it too pricey for us.
Still, we decided to put in an offer of $370,000. You never know, and coming in with 20 percent down, the bank might take our lower offer against a higher price but less of a down payment.
Two days later, there were already six offers and the agent sent the top four, of which we were one, on to the bank. Someone offered $400,000 and the bank took it. Oh, well, it’s better to let a property go than to pay more than you can afford. It was definitely worth the accepted price, as the same model without a pool sold a month before for $400,000.
Again, it wasn’t the last time we would hear about this property, which is why it’s important to stay on top of houses you like, even if you didn’t get it the first time around.—Rick Hazeltine