Well, as of yesterday, I have been the proud owner of a second house (edit: for two months now) - House #1. I had hoped that this house would have gotten at least a few offers by now, but nothing. My agent keeps telling me it's overpriced - not technically, but market-wise - and I may be in denial. My thinking, though, has turned from one of a retail flip mentality to more of a Buy-and-Hold one. Thus, I'm not as concerned about lowering the price and getting this thing sold as I was at the beginning. As I've stated upteen times in my blog, I really like this property and would like to keep it in my inventory as a rental. I'll still leave it on the market with it's current price/terms, but I'm more focued on getting a renter or T/B in it than an owner.
Of course this new approach means I'll have to think about refinancing the property. Even if I didn't want to refi to pull cash out, I still have to refinance to get better terms. As it is, I have two loans - an 80% IO loan and a 20% short-term loan. The good thing is both carry NO prepay penalty, so I can refi without worrying about additional backend costs associated with the loans. I talked to my wife briefly about it last night, and she "sort of" agreed. (I say 'sort of' because it's hard to guage what she thinks and what she says at times about this house.) She asked if I would use the same broker who financed the original loans, and I told her "probably". There are several reasons why I would go back to him:
- I've already built a reporte with him. This will make it easier to finance properties in the future. He has my file. He knows my situation as an investor.
- He has given me a couple of leads. Sure, they didn't pan out, but the fact that I have another avenue open is positive. Yeah, I might find someone else who can do the same thing better, but I wonder if it would be worth the hassle of trying to find one who MAY be better at the beginning.
- Building a relationship can possibly get me better deals in the future with him. This is just a guess on my part, but after I bring in a few deals, I'm sure he'll begin to notice he has a steady client. And what's the first rule in business? Never lose repeat customers. (Okay, maybe it's not THE first rule, but it's certainly up there.) As many investors say, almost everything is negotiable. Having repeat business with him could very possibly give me leverage to reduce a few expenses when financing deals.
- He is very easy to converse with. I know sounds cliche, but he is a very nice, down-to-earth guy who is very good at what he does.
Again, the main reason for refinancing is to get better terms on the loans, since I plan to hold htis property long term. However, I also plan to pull some cash out when I refi to pay off the expenses incurred with this deal, if nothing else. I also plan to put aside some funds for holding costs (just in case) and for future deals.
I plan to swing by the property today to see if my RE agent made any additions to the fliers and sign (i.e., reduced the sale price and added references to it being for lease). I hate getting the cattle prod out, but sometimes it has to be done.
BTW, at first I had thought about getting a property management company to oversee the landlord duties of the house (if it gets rented out), but have decided to do it myself - at least initially. If it becomes too much of a pain, I'll reconsider a PM company. But I figure for one property that's already in good shape (it was built in 2002), there shouldn't be too many foreseeable promblems with it (knock on wood). Plus it will give me experience on dealing with tenants up front and experiencing the day-to-day operations of a landlord.
2 comments:
Oh, no doubt. As part of my agreement with my RE agent, she (or her company) will do this for me. I was mainly refering to the month-to-month duties afterward. However, as soon as I get another property to hold, I'll definately hire a PM company to handle the management. One would give me experience - two will give me a headache. :-P
We're still managing our first rental ourselves. We never hear from the tenants (not to jinx it) and have had the same family in the house since we rented it to them two years ago. We had some initial fixes to do when they moved in. The previous owner (also an investor) left some deferred maintenance for us to handle. But, they've been great. Rent has always been early, not just on time. We screened these people ourselves, too. You can run online credit reports for your prospective tenants. And, you can charge them an "application fee", which will pay for the credit report.
Post a Comment