We looked in the Pensacola area for 12+ months and made offers on 3 other MFRs before we found one that fits our investing criteria. I was so anxious to get in a MFR at times I found myself compromising on our #s – trying to convince myself the #s were ok, they’ll improve later. They were not ok and we’re not doing this to be just ok. Compromising on the #s is a no-no and this has been a great discipline exercise for me and great display of patience (which I rarely have – I must be getting older/wiser). As we stuck to our investing criteria, we finally found one. And I’m not just talking about a good deal, I’m talking about a great deal; at least it looks like that on paper :).
Excitement. What makes this such a great deal?
- Cash Flow. This Gulf Breeze duplex is expected to cash flow way better than our investment criteria require. I couldn’t wait to close on it and have the revenue coming in.
- Expanding: Our portfolio was expanding and so was our net worth.
- Subdivide Lot = Extra Cash Flow. This duplex is on a lot big enough to be sub-divided (which we will eventually do). This area of Gulf Breeze is zoned for many uses, so very little investment on the sub-divided property should yield a few extra hundred dollars more in monthly cash-flow. Another option is to sell off the subdivided lot, lowering our cost point on the duplex.
Struggles. As-in, things that made me question what we’re doing.
- Patient to find a good great deal. Now that we’ve found a great deal, this will be easier for me to repeat the next time.
- Banks/Mortgage Brokers. This probably goes without saying but I’d rather someone dig sand out from underneath my toe nails with a spoon vs. working with Banks/Mortgage Lenders . We have a great credit score, we have the down payment, W2s, etc, but I just felt like I was chasing them –take my business please!!! Can’t quiet understand why they weren’t chasing me.
- Postponed Closing. Even though I finally caught a lender by the tail and started the process of ensuring financing with them a few days after we went under contract, it took 3+ months for them to pull everything together. The Gulf Breeze seller wanted to pull out, but thanks to my realtor for calming the seller down and bringing him back in. This was a new relationship with this bank and I’m hoping this doesn’t happen with our next acquisition. If it does, at least I’ll be used to it – they have REALLY good rates.
- Choosing a property management company. Gulf Breeze is a bit of a drive and with our portfolio expanding, I thought its best to bring on some extra help. I called 4 different property management companies (top hits from Googling ‘Pensacola Property Management’) and went with the only one that called me back. Luckily, they have impressed us thus far with their availability and response times.
- Verified Rent Roll. We wanted to make sure the tenants were paying at least the amount of rent we used in our calculations to underwrite the deal. They were actually paying a little more.
- Current Tenant Rental Agreements. We also wanted to ensure what the current rental agreements look like as we would inherit those (at least until they expire) with the purchase. We also wanted to be aware of any security deposits the tenants paid that will need to be transferred to us at closing.
- Maintenance History of Each Unit. Just another verification step we took to ensure we weren’t acquiring a property that had a bunch of deferred maintenance.
As the months roll on and this property produces like expected, I’m certain our Excitements will make me easily forget our Struggles. Like a new parent who struggles to get through the first 6 months, I’m hoping we quickly forget the stress and zombie feeling of being new parents.