Some of you know this, but many may not. David and I started buying rental properties this year. We have a goal to build up a portfolio of good properties, fix them up nice, and rent them into the foreseeable future. Housing prices are depressed, so it's a good time to buy and hold. The goal is to accelerate our loan payments with the rent received so by the time we are 50, we have rent-able assets with no mortgage. Stable source of independent income.
My name is Julie....and I'm a Planner. Coming up with "a plan" is something I love to do...and seeing the plan being realized is So Fun! Especially a Financial Plan!! Between Julie the Accountant and David the Finance major (did you know David was a Finance major?)...we love to solve money issues. Sit down at the kitchen table, run the numbers, look at the spread of options, decide what our real goal is, weigh the risks, and figure out how to mitigate those risks and make it work. We even High-Five each other when we reach the solution! Hey...doesn't everyone High-Five and Hug during financial planning? Well...that's how we roll.
Side note: We have gotten several comments about "How can you afford that?" "Where are you getting the money to do that?" No worries. David and I are not reckless and we make smart choices. A lot of houses are selling below market value right now, for one reason or another...a lot below. Find one with great potential. Snatch it up, fix it up...and now it's worth market, but your investment is a lot lower than that. Get a loan based on market value. Rinse and Repeat. It's not complicated, but it is a numbers game. The numbers have to work or it's not a good deal.
Okay...so back to this week. I get a call from my agent, "There's a house I think you should see." I check out this house and immediately there are things I like about it, but it is also in pretty bad shape. I start to get quiet...I'm thinking. Walking around the house...and thinking. How much will the rehab cost? What could I rent it for? Do I like that area? What would I be willing to pay for it? There's a bunch of unknowns in a house like that. Got to factor those in. I head home...think some more. Calculator comes out. I decide to low-ball it and see if they even respond. Maybe we can get a dialog going. Let's see what they do. House is already listed below market, but not enough below I don't think. At least not enough for my model to work. Tuesday afternoon, I submit an offer...a really low one...20% less than asking price.
Wednesday mid morning, I get a counter. A dud counter. They came down $1,000. Okay, what this means to me is that they think it's worth what they're offering (and it probably is - to someone else), and they don't plan to budge, but they are still willing to discuss it with me. My agent thinks it's worth the price...and I agree, but just because the house it "worth" a price doesn't mean it will fit "my plan." The plan that we High-Fived over at the kitchen table. Got to stick with the plan. Do the numbers work?
All day Wednesday, I am thinking. Processing. Calculating. What's the high & low rehab figure? What will it appraise for after rehab? What's the high & low rent range? I decide to drive through the neighborhood again. I like it. I like the house. Time for a serious offer, but what should it be? I'm sitting on the couch with my Iphone calculator and mortgage calculator...being still...thinking...and waiting for the whisper. Waiting for the nudge to help me decide. What is the most I'm willing to pay? Honestly, I'm not sure. I'm kind of black & white. In this instance, I'd like to have a number where I could confidently rest and say "This is the highest I can go within my plan. If I can't get it at that number, then that's fine." For some reason, I couldn't rest on a figure. Too many unknowns I guess.
In the stillness of my space, late Wednesday afternoon. I start to hear the whisper. The Jesus whisper. An internal suggestion of sorts. He suggested a number. It was a number I was sure they would reject and was lower than the number I was thinking about countering. But it was a number significantly higher than my first offer. Hmmm. That number would definitely give me more room for a "fudge factor," it's definitely higher than my original offer which communicates that I'm serious. Okay, I follow The Whisper and text my agent the counter offer late Wednesday. In the meantime, I am trying to still decide where my high figure will be. If they come down at all, how high am I willing to go?
I think about it a few times on Thursday, but really give myself a break and just wait to see what they counter. Thursday is busy and I'm working at the office. No text from my agent. I run some errands and get a text at 4:00. I get excited for a second when I see that it's my agent...but all she says is that she hasn't heard anything. The house is bank-owned, so the response may not be quick...but it was quick the first time. That's strange. (This is the dialog in my head). I'm eating dinner with David (kids are with grandma) and telling him about the house...what it looks like, what I like about it, the status of things, etc. During dinner, I get a call from my agent. She is excited. They accepted your offer!!! They accepted your offer!!! *Gasp* I immediately thought about Jesus and imagined Him whispering into the ears of those bankers over there...This is a good offer. You must accept this offer. Kind of like Obi Wan...These are not the droids you are looking for *insert hand wave here*. Ha! Did I mention we are a Star Wars loving family?
Thank you Jesus for your sweet whispers to me that guide me and show me where to go in the darkness. I love you and need you as my greatest Companion, Father & Friend.
Stay tuned for 1 more Jesus whisper this week....can it get better? Yes it can!
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