Our First Investment Property!

Ever since I was very little, I was fascinated with real-estate. Partially could be the fact that my parents also dabbled into real-estate in Taiwan which gave me the inspiration. Before I met Ivica, I wanted to purchase a home in the Midwest, at the time, I was able to put down the 20% down payment myself from my cruise ship earnings but the deal did not go through as I was not comfortable with the level of rehab I would have to do on my own before it could be rented out. A year later, I met Ivica and we started together on this journey of searching for a property.

Step 1:

The Agent – We identified a real-estate agent from Zillow and decided to work with her as our Buyer’s agent. We explained the situation that I may or may not live in the property myself due to future job opportunities. If I landed a job in the Midwest then it would be a residential property, if I land a job abroad, then we may potentially rent it out. It’s important to work with an agent that you can be totally honesty with, who is looking out for you every step of the way. The key is to find someone who will actually listen and remember your needs, rather than finding a list of properties that are not suitable for you, thus, wasting both of your time.

Step 2:

The Cash – When I was searching for properties on my own, I had already gone to a local bank to get a pre-approval letter qualifying up to the amount that I can purchase on a home. This particular case, we saved up enough cash to know that if the property was worth it, we could get it in cash. Moving forward, we would like to try and leverage the cash by getting loans for future properties, but if it’s an auction or foreclosure with many buyers on the line, cash is always king and can assist any situation.

Step 3:

The Search – From the day we started to look to the day we got the keys, was about a 3-months time frame. The key lesson that I learned through the search process was that one really has to be patient and treat it like a business. In the beginning, I would lose sleep over wanting a property badly, only to find out it was quickly sold or the seller did not accept our offer due to multiple bids. After two months of searching, I felt a little defeated and we took a trip to Florida for 2 weeks for Ivica’s training. When we returned, I saw a condo that was a foreclosure property on Zillow and texted my realtor to see it that afternoon. The next day, we put in our offer but was told that two other offers were on the table and the seller would take the highest bid only. We picked a number we were comfortable with and submitted the final offer. 2 days later, we got the awesome news that the property is ours!

Step 4:

Closing – Since it was a foreclosure property, the closing process took another month before we could get the keys. I have to say, due to the fact that we had the cash prepared, it only took about 10 minutes to sign all the paperwork and they keys were ours. Since it was our first property, I didn’t really know what to expect at closing but we literally got our keys and drove to our condo in less than half hour.

Step 5:

Get the property ready – During the 1 month time frame we had while we waited for the property to close, we shopped for brand new stainless steel appliances, compare carpet cleaning companies, and etc. We were lucky in the fact that this property did not need any remodel work and it was pretty much move-in ready. The day we got our keys, we had the appliances delivered, we rented the carpet cleaner from Lowes and did the work ourselves since we had time-off. Put in a few scented plug-ins and cleaned the kitchen and bathroom ourselves. The place was ready since we did most of the preparation ahead of time. At this point, I had decided that I would go to Shanghai rather than staying in the U.S. for work since I could be closer to Ivica’s ship.

One day after we got our keys, Ivica was scheduled to fly back to the ship to join his ship. This left me to do the rest of the work myself in terms of finding tenants for our property.

Step 6:

Finding tenants –I researched and set up accounts on online platforms to advertise our property, this took me only about 1 night. Sites like Zillow, Trulia, Realtors were fairly easy to navigate. I didn’t use Craigslist but I probably will in the future. Since it was my first property, I even printed out physical posters and put them around local grocery stores in the “ad” sections. (Won’t be doing that moving forward since it’s not eco-friendly and people don’t really take flyers these days)

After I put up the advertisements, my family went on a 10 days trip to Ecuador (That will be another post!). During the time that I was in Ecuador, I was receiving emails from people who were interested in renting out our property. I set up meeting times and lined them up for when I returned from our trip (all the email correspondence was done from the comforts of an Airbnb in Quito).

Step 7:

Rent the property out – I was lucky enough to find tenants days after I returned from the trip. Since this was a condo, we had contracts/templates provided by our HOA (Homeowner’s Association). One can easily find contracts if you Google them or you can find templates on sites like Zillow. We signed our contract with two ladies and I brought the contracts to my local bank to have it stamped and notarized. Once tenants sign the contract, the next thing is to buy homeowners insurance (we used Statefarm). When homeowners insurance is place, the place is ready for move-in.

Currently since my parents are living nearby, they are acting as our Property Managers. Eventually, if they move out of the area, we will look into a PM company to help us manage the property. It certainly will eat into our profits, but I don’t mind paying for PM service as long as they are good at what they do. Our goal is to repeat this process until the income from rentals can replace our incomes.

Summary: Our favorite quote comes to mind once again. “Luck is what happens when preparation meets opportunity”. Luck was on our side to have found a property and got it for half of its value, but we were prepared with the money due to hard work and savings during the previous years on ships. We are also very grateful that our tenants take great care of our property and pay rent on-time every month so far.

Lesson learned:

• Our property has a great school district (8 out of 10) ranking on Zillow, this may have been a factor that we were able to find renters so quickly.
• HOA fees definitely eat into our profits each money, however, we do not have to worry about roof maintenance, landscape maintenance, snow shoveling, or any of the exterior of the building. We may or may not purchase condos/apartments in the future, depending on if the numbers make sense.
• Do not purchase washers/dryers – most renters who came to see the place already have their own washers and dryers. If we as the landlords, provide them – chances are if they break down, they will call you and expect them to be fixed. Moving forward, we will only provide appliances that are necessary in the kitchen.
• Have patience – I was definitely getting antsy with the timeline we had. Between Ivica going back onboard and me deciding whether I was going to move to Shanghai or stay in the U.S., the pressure was definitely there. In the end, everything worked out the way it’s meant to. I lost sleep over other properties, which I thought were great deals, but in the end, I couldn’t be happier with our purchase!

Breakdown of total expenses:

Breakdown of rental income: