Annual "Oh yeah, Livejournal's a thing!" update!
Not that there's usually much for me to say :P Still employed, still living in an apartment! But! I'm finally working days now; a run opened up back in like February in an area I'm actually familiar with that I signed up for. And I got it! But had to wait a month or two for them to find a replacement driver for me, since we really can't afford to lose linehaul drivers for longer than a day or week. I also finally reached top pay scale (2 years early thanks to a shift in how that works; my terminal was one of the few remaining terminals doing the whole 5 years to top pay thing, while others within the same company were advertising 3 years. Not exactly fair!) so I can safely switch to days without negatively impacting my budget. And while my budget does allow for a bit of variance in income, I like having extra money at the end of the week because then I can allocate it to other bills, like a credit card bill. Or an auto loan! Which was paid off early! :D
Recently I decided it's time to get a house. I've got my finances well under control, I've been able to put over $1,000 a month extra into various bills, so why not put it in savings for a down payment? Late last year I got in touch with a mortgage company to get an idea of what my current budget would permit me to do loan-wise. Getting preapproved! Found out I could get a $100k house! And since I'm a first time home buyer, I wouldn't need a big down payment, if at all! Sweet! Okay, so let them know that I'd be looking to go forward with this some time in July, to allow for my roommate to be able to get a second job and be able to take over the current apartment. As well as allow time for me to get my shit in order.
Fast forward to July. Get in touch with the mortgage company, forward current financial info, and find out my preapproval changed. To $120k. Aw yeah :D But for my own sake I wasn't going to look for anything above $100k, because I wasn't interested in $1k payments. I really don't like the idea of having any of my monthly bills be higher than what I get in a week's net pay. It leaves very little room for emergencies. If I had fewer bills, I'd consider it. Anyway, the most important first step to acquiring a house, knowing what you can afford, has been accomplished.
Got in touch with a realtor to figure out what I want from there. Which wasn't hard. Given I'm single, I don't need to find a place that has plenty of space for a family, so I could settle for anything! I'm super handy so I don't need that perfect place with no problems. In fact, I actively wanted a place that required work! Original plan was get into the flipping business. Buy a home, spend some time fixing it up, and selling it! And there are plenty of places like that! But I still wanted no less than 3 bedrooms, 2 floors, with a garage, and a basement. Ideally closer to 2,000+ sqft but I'd settle for 1,500. Luckily, still hundreds of places like that!
Decided to cast a bit of a wide net. Looking for places within 30 miles, or at most an hour's drive from work. I can't afford to switch jobs doing this right now, and I don't want to drive more than an hour to get to my job where I drive for hours, then drive for another hour going home. I'd prefer fairly close to work, but for the right place I'd be willing to drive for an hour. Checked out a few places! And saw a few... interesting places. Some that were in really good condition, some that... well, the owner(s) stopped caring years ago and it really showed. At least one of those it would have been better to knock the whole building down and start fresh. A couple HUD (foreclosed homes that had a governent-backed mortgage) homes that... there's no way I could live in them and work on them. And the fact that FHA mortgages (government backed mortgages) require houses be in far better shape to get them... I'd not get financing for them. But no matter!
Eventually I found some really nice houses just east of where I currently lived! One I wish I could have gotten simply because of that sweet deep 6 car garage. But there were problems with the house, and while I could have easily found solutions for the house it just opened up more problems that aren't so easy to find solutions for. Namely.. the house had almost no closets. At all. The only real "closet" was a pantry off the kitchen. I could potentially fix that but I'd have to redo some of the floor plan to make it work, and figuring out how to do that without losing too much living space was... not easy. A pity. Found another house in great condition! But the driveway was all busted up, the garage floor was all busted up, and that was probably going to be close to a $10k job there. Another one with a garage that had a failing support, and would probably have to be rebuilt.
Eventually I decided to check out Oshkosh, and found a house I thought would really work well! Good condition, except.. the garage was sinking into the ground and breaking apart. Literally. It was never put on a foundation. But that's not a big deal. Building a garage from the ground up would be a great test of skills! Call in a professional to do the foundation, get the lumber and build the frame, put up OSB, siding, maybe call in someone to shingle the roof, etc. A fun project I could do with a couple handy people! Basement needed to be power washed and painted, but beyond that it was in good condition!
And then I found the house of my dreams :D A combined 2 lot property somehow zoned into one, with a house on one lot, and a church on the other, connected. The church had been remodeled into a gorgeous home on the inside. Absolutely amazing. The house was gutted. So essentially a blank slate for me to work with. And they were only asking $85k! But alas, it was never meant to be, because the unique condition of the livable portion of the place was... well, it was too difficult to appraise. My agent got in touch with the mortgage guy, who called up a couple appraisers in the area, and they had no idea how to even approach it. The house was easy. Just an extra building. Not considered a house because it's gutted. But the church... they had no idea how to go about it. So there's no way I could get it without going through a credit union with a 20% down payment, which I definitely did not have. Ah well!
Then my realtor suggested a different approach to what I wanted to do. He recently listed a couple places that could potentially work. A duplex, and a $150k house I could potentially talk down to $120k that had a large workshop I could play with. Both within the Fox Valley, where I currently live and work. A gorgeous house, on fairly large land, still in the city yet on the outskirts with a good amount of privacy. Tempting! But again, I really wasn't looking forward to paying $1k monthly. The duplex on the other hand... It was supposedly well taken care of, all I'd have to do is enjoy living in it for a few years and either rent out the lower or keep using it as a base of operations while I do my thing with other houses, which would open up the possibility of getting houses in unlivable conditions. And all the while I could rent out the upper, effectively cutting my mortgage payment in half!
Checked it out the duplex, and spent some time thinking. Do I really want to do this? Can I pull this off, being a landlord? Which got me to thinking more. What if I did do this? And kickstarted a business of buying, fixing up 1-2 bedroom houses/duplexes, and rented them out? Which sounds really freaking appealing, because then I could do the whole buy and fix thing, but use them as an investment by getting tenants to cover the mortgage bills with a little extra I could set aside for upkeep and profit, and use those to eventually buy more places, and by the time I retire I'll have a nice little empire of rental houses that I can just collect rent on, or sell and use that as my retirement! It'd be really nice if in 10-15 years time I could get enough of an income to quit my current job, take on a part time job, and focus more on the landlord thing full time.
So you know what, screw it. I'm still young enough to pull this off, old enough to know what I'm doing (or easily figure it out, because I really have no idea what I'm doing :D) and with interest rates the way they are (super low, but threatening to bump back up any time now) it's one of those now or never types of deals. Get a place while interest rates are amazing, lock that rate in, and enjoy that property, while slowly building an empire! So I got an idea of what mortgage packages were available to me, and made an offer!
And then things have been non stop from there. Offer was accepted, so now I had to do a bunch of things! Deposit $1k in earnest money (to put it simply, it's literally "putting your money where your mouth is), backing up my promise to go ahead with this purchase with a $1k non-refundable payment that goes into my down payment if I go ahead with it. There are, of course, some contingencies that would allow me to back out of the deal and get my money back, like if an inspection came up with major issues I did not want to deal with, but I can't just get cold feet and walk away without losing that money now. Have to hire a home inspector! Which I did first chance I got. I also looked into insurance rates, getting a few quotes and selecting one I think will best meet my needs. I'll be getting in touch with them about that later next month.
The home inspection went fairly well! The inspector pointed out a number of things I need to keep an eye on with this property, but nothing serious! The electrical stuff was a bit wonky in some areas (incorrectly wired plugs), and had a couple things that weren't bad but needed to be looked at since code changed a bit since they were implemented. Like wiring up a 3 wire feed panel instead of a 4 wire feed panel. Nothing major, it was wired correctly for the time, and really it may not even need to have anything done. Outside cable was not in a conduit. I opted to have the owners take care of those, simply because the circuit panels are outside my level of expertise, and that unprotected main line is not something I am even remotely qualified to do, since it probably involves disconnecting it from the meter itself and sliding a conduit over it. That sort of thing is something only a licensed electrician should handle!
Carport wasn't properly secured, but that's as easy as lifting the deck up enough to put some concrete anchors in, re-position the 4x4 posts so they're centered, and nail the posts to the anchors. The lower main water line needs to be replaced. At least half of it. Someone decided to use PVC pipe. The kind you use for drainlines. The kind that is not rated for water lines. I doubt it's going to kill me, and it's definitely not leaking anywhere, but it is something I want to take care of. And it wouldn't be hard! Roofing is a rubber pad, and not quite sticking properly in some places, but it's not leaking either, so it's just a simple keep an eye on it and patch it when required type of deal until I can afford to replace it in 3-8 years, which is roughly the current lifespan of the roof for the house and the garage.
Siding on the upper needs to be scraped and painted, but that's not a big deal, and now's the time to do it before the first snow comes in. One of the windows has a broken seal, but it's not an immediate concern either, and it's in the downstairs where I'll be living, so whatever. It can wait!
Great thing about this place though is the basement is 100% the lower. Upper has no access to it! Same with the garage. While I'll probably share it with the current tenant for the time being (since they're going to be moving out next year anyway it sounds like) I'll likely either not share it since the upper has a carport right next to the stairs leading up, or charge a reasonable fee per month to use half the garage.
Really excited about all this. I realize there's a lot of responsibility to renting out an apartment/duplex, but I feel like it's not outside my realm of abilities, and considering normal rent could be $450/mo that would easily cut my mortgage payments in half right there. However! I'm thinking, in order to have a good amount of funds set aside for the place, I'll be using an unused checking account purely for the property, where rent income and mortgage/maintenance expenses will be handled. I'll be technically renting the place to myself for $650/mo, which is about what I could get for it if I did rent it out, so that'll put $1,100/mo in there. $300-$400 more than the mortgage payments. That should put over $4k a year into the place that can be used for maintenance/upgrades. Assuming I can keep a tenant in the upstairs with little to no gaps! But it sounds like I've got plenty of prospective tenants, from family (who will have to understand that they are tenants first, family second. I am willing to cut them a bit of slack but this isn't me sharing a house, it's me trying to run a successful business!) to a couple coworkers who might need to vacate their current place to some out of state friends who either want to stay for a few years for college or just want to live in the area! :D
Anyway, one of the requirements for the loan I'm trying to do requires I take a home buyer's course through a counseling service. And since it's a duplex, I also need to take a landlord course. Wound up doing both of those yesterday. Almost 10 hours of doing that stuff. But it's done, and aside from some one on one counseling that I'll need to do over the phone tomorrow it meets one of the last requirements I need to get the loan! Waiting on the appraisal still, which will happen Tuesday. I don't have to be there for that though. That's basically a thing the lender requires to make sure that the house is actually worth what they are lending.
Tuesday is also the day I close on a personal loan (that the mortgage lender knows about!) using my car as collateral. Yeah I know, I just paid that thing off, and now I'm getting another loan on it? There's a reason for that though! Another requirement the mortgage program I'm going with has for duplexes is 6 months of mortgage payments set aside in a reserve account. And will all my finances added together I'm still $2,000 short. I'd be able to get most of that by the end of next month, which is when the close date is, but I'll still be short a few hundred. So it's either beg my family for money (Which I'd really rather not do), or get a secured loan somewhere. Which is what I'm doing with the car. Put $3,000 in the bank account I plan on using for the place, and with the $3,000 I have right now (plus the $1,500 I plan to add to it by the closing date) that will cover pretty much every single money requirement I'll need, from the down payment to any closing costs not covered by the seller (who is paying for most of them!) to the reserve I need. And honestly, while it's a 3 year loan (I think?) I could easily have it paid off by December. No early payoff penalties either, which is a great thing!
Recently I decided it's time to get a house. I've got my finances well under control, I've been able to put over $1,000 a month extra into various bills, so why not put it in savings for a down payment? Late last year I got in touch with a mortgage company to get an idea of what my current budget would permit me to do loan-wise. Getting preapproved! Found out I could get a $100k house! And since I'm a first time home buyer, I wouldn't need a big down payment, if at all! Sweet! Okay, so let them know that I'd be looking to go forward with this some time in July, to allow for my roommate to be able to get a second job and be able to take over the current apartment. As well as allow time for me to get my shit in order.
Fast forward to July. Get in touch with the mortgage company, forward current financial info, and find out my preapproval changed. To $120k. Aw yeah :D But for my own sake I wasn't going to look for anything above $100k, because I wasn't interested in $1k payments. I really don't like the idea of having any of my monthly bills be higher than what I get in a week's net pay. It leaves very little room for emergencies. If I had fewer bills, I'd consider it. Anyway, the most important first step to acquiring a house, knowing what you can afford, has been accomplished.
Got in touch with a realtor to figure out what I want from there. Which wasn't hard. Given I'm single, I don't need to find a place that has plenty of space for a family, so I could settle for anything! I'm super handy so I don't need that perfect place with no problems. In fact, I actively wanted a place that required work! Original plan was get into the flipping business. Buy a home, spend some time fixing it up, and selling it! And there are plenty of places like that! But I still wanted no less than 3 bedrooms, 2 floors, with a garage, and a basement. Ideally closer to 2,000+ sqft but I'd settle for 1,500. Luckily, still hundreds of places like that!
Decided to cast a bit of a wide net. Looking for places within 30 miles, or at most an hour's drive from work. I can't afford to switch jobs doing this right now, and I don't want to drive more than an hour to get to my job where I drive for hours, then drive for another hour going home. I'd prefer fairly close to work, but for the right place I'd be willing to drive for an hour. Checked out a few places! And saw a few... interesting places. Some that were in really good condition, some that... well, the owner(s) stopped caring years ago and it really showed. At least one of those it would have been better to knock the whole building down and start fresh. A couple HUD (foreclosed homes that had a governent-backed mortgage) homes that... there's no way I could live in them and work on them. And the fact that FHA mortgages (government backed mortgages) require houses be in far better shape to get them... I'd not get financing for them. But no matter!
Eventually I found some really nice houses just east of where I currently lived! One I wish I could have gotten simply because of that sweet deep 6 car garage. But there were problems with the house, and while I could have easily found solutions for the house it just opened up more problems that aren't so easy to find solutions for. Namely.. the house had almost no closets. At all. The only real "closet" was a pantry off the kitchen. I could potentially fix that but I'd have to redo some of the floor plan to make it work, and figuring out how to do that without losing too much living space was... not easy. A pity. Found another house in great condition! But the driveway was all busted up, the garage floor was all busted up, and that was probably going to be close to a $10k job there. Another one with a garage that had a failing support, and would probably have to be rebuilt.
Eventually I decided to check out Oshkosh, and found a house I thought would really work well! Good condition, except.. the garage was sinking into the ground and breaking apart. Literally. It was never put on a foundation. But that's not a big deal. Building a garage from the ground up would be a great test of skills! Call in a professional to do the foundation, get the lumber and build the frame, put up OSB, siding, maybe call in someone to shingle the roof, etc. A fun project I could do with a couple handy people! Basement needed to be power washed and painted, but beyond that it was in good condition!
And then I found the house of my dreams :D A combined 2 lot property somehow zoned into one, with a house on one lot, and a church on the other, connected. The church had been remodeled into a gorgeous home on the inside. Absolutely amazing. The house was gutted. So essentially a blank slate for me to work with. And they were only asking $85k! But alas, it was never meant to be, because the unique condition of the livable portion of the place was... well, it was too difficult to appraise. My agent got in touch with the mortgage guy, who called up a couple appraisers in the area, and they had no idea how to even approach it. The house was easy. Just an extra building. Not considered a house because it's gutted. But the church... they had no idea how to go about it. So there's no way I could get it without going through a credit union with a 20% down payment, which I definitely did not have. Ah well!
Then my realtor suggested a different approach to what I wanted to do. He recently listed a couple places that could potentially work. A duplex, and a $150k house I could potentially talk down to $120k that had a large workshop I could play with. Both within the Fox Valley, where I currently live and work. A gorgeous house, on fairly large land, still in the city yet on the outskirts with a good amount of privacy. Tempting! But again, I really wasn't looking forward to paying $1k monthly. The duplex on the other hand... It was supposedly well taken care of, all I'd have to do is enjoy living in it for a few years and either rent out the lower or keep using it as a base of operations while I do my thing with other houses, which would open up the possibility of getting houses in unlivable conditions. And all the while I could rent out the upper, effectively cutting my mortgage payment in half!
Checked it out the duplex, and spent some time thinking. Do I really want to do this? Can I pull this off, being a landlord? Which got me to thinking more. What if I did do this? And kickstarted a business of buying, fixing up 1-2 bedroom houses/duplexes, and rented them out? Which sounds really freaking appealing, because then I could do the whole buy and fix thing, but use them as an investment by getting tenants to cover the mortgage bills with a little extra I could set aside for upkeep and profit, and use those to eventually buy more places, and by the time I retire I'll have a nice little empire of rental houses that I can just collect rent on, or sell and use that as my retirement! It'd be really nice if in 10-15 years time I could get enough of an income to quit my current job, take on a part time job, and focus more on the landlord thing full time.
So you know what, screw it. I'm still young enough to pull this off, old enough to know what I'm doing (or easily figure it out, because I really have no idea what I'm doing :D) and with interest rates the way they are (super low, but threatening to bump back up any time now) it's one of those now or never types of deals. Get a place while interest rates are amazing, lock that rate in, and enjoy that property, while slowly building an empire! So I got an idea of what mortgage packages were available to me, and made an offer!
And then things have been non stop from there. Offer was accepted, so now I had to do a bunch of things! Deposit $1k in earnest money (to put it simply, it's literally "putting your money where your mouth is), backing up my promise to go ahead with this purchase with a $1k non-refundable payment that goes into my down payment if I go ahead with it. There are, of course, some contingencies that would allow me to back out of the deal and get my money back, like if an inspection came up with major issues I did not want to deal with, but I can't just get cold feet and walk away without losing that money now. Have to hire a home inspector! Which I did first chance I got. I also looked into insurance rates, getting a few quotes and selecting one I think will best meet my needs. I'll be getting in touch with them about that later next month.
The home inspection went fairly well! The inspector pointed out a number of things I need to keep an eye on with this property, but nothing serious! The electrical stuff was a bit wonky in some areas (incorrectly wired plugs), and had a couple things that weren't bad but needed to be looked at since code changed a bit since they were implemented. Like wiring up a 3 wire feed panel instead of a 4 wire feed panel. Nothing major, it was wired correctly for the time, and really it may not even need to have anything done. Outside cable was not in a conduit. I opted to have the owners take care of those, simply because the circuit panels are outside my level of expertise, and that unprotected main line is not something I am even remotely qualified to do, since it probably involves disconnecting it from the meter itself and sliding a conduit over it. That sort of thing is something only a licensed electrician should handle!
Carport wasn't properly secured, but that's as easy as lifting the deck up enough to put some concrete anchors in, re-position the 4x4 posts so they're centered, and nail the posts to the anchors. The lower main water line needs to be replaced. At least half of it. Someone decided to use PVC pipe. The kind you use for drainlines. The kind that is not rated for water lines. I doubt it's going to kill me, and it's definitely not leaking anywhere, but it is something I want to take care of. And it wouldn't be hard! Roofing is a rubber pad, and not quite sticking properly in some places, but it's not leaking either, so it's just a simple keep an eye on it and patch it when required type of deal until I can afford to replace it in 3-8 years, which is roughly the current lifespan of the roof for the house and the garage.
Siding on the upper needs to be scraped and painted, but that's not a big deal, and now's the time to do it before the first snow comes in. One of the windows has a broken seal, but it's not an immediate concern either, and it's in the downstairs where I'll be living, so whatever. It can wait!
Great thing about this place though is the basement is 100% the lower. Upper has no access to it! Same with the garage. While I'll probably share it with the current tenant for the time being (since they're going to be moving out next year anyway it sounds like) I'll likely either not share it since the upper has a carport right next to the stairs leading up, or charge a reasonable fee per month to use half the garage.
Really excited about all this. I realize there's a lot of responsibility to renting out an apartment/duplex, but I feel like it's not outside my realm of abilities, and considering normal rent could be $450/mo that would easily cut my mortgage payments in half right there. However! I'm thinking, in order to have a good amount of funds set aside for the place, I'll be using an unused checking account purely for the property, where rent income and mortgage/maintenance expenses will be handled. I'll be technically renting the place to myself for $650/mo, which is about what I could get for it if I did rent it out, so that'll put $1,100/mo in there. $300-$400 more than the mortgage payments. That should put over $4k a year into the place that can be used for maintenance/upgrades. Assuming I can keep a tenant in the upstairs with little to no gaps! But it sounds like I've got plenty of prospective tenants, from family (who will have to understand that they are tenants first, family second. I am willing to cut them a bit of slack but this isn't me sharing a house, it's me trying to run a successful business!) to a couple coworkers who might need to vacate their current place to some out of state friends who either want to stay for a few years for college or just want to live in the area! :D
Anyway, one of the requirements for the loan I'm trying to do requires I take a home buyer's course through a counseling service. And since it's a duplex, I also need to take a landlord course. Wound up doing both of those yesterday. Almost 10 hours of doing that stuff. But it's done, and aside from some one on one counseling that I'll need to do over the phone tomorrow it meets one of the last requirements I need to get the loan! Waiting on the appraisal still, which will happen Tuesday. I don't have to be there for that though. That's basically a thing the lender requires to make sure that the house is actually worth what they are lending.
Tuesday is also the day I close on a personal loan (that the mortgage lender knows about!) using my car as collateral. Yeah I know, I just paid that thing off, and now I'm getting another loan on it? There's a reason for that though! Another requirement the mortgage program I'm going with has for duplexes is 6 months of mortgage payments set aside in a reserve account. And will all my finances added together I'm still $2,000 short. I'd be able to get most of that by the end of next month, which is when the close date is, but I'll still be short a few hundred. So it's either beg my family for money (Which I'd really rather not do), or get a secured loan somewhere. Which is what I'm doing with the car. Put $3,000 in the bank account I plan on using for the place, and with the $3,000 I have right now (plus the $1,500 I plan to add to it by the closing date) that will cover pretty much every single money requirement I'll need, from the down payment to any closing costs not covered by the seller (who is paying for most of them!) to the reserve I need. And honestly, while it's a 3 year loan (I think?) I could easily have it paid off by December. No early payoff penalties either, which is a great thing!