Our First Rental Property

There are 22,279,278 Landlords in the USA as of June 25, 2014, according to rentalprotectionagency.com . So in May of 2013 my father and I decided to follow one of our life long dreams and take our first step toward becoming Landlords. In preparation for such a large investment, we did lots of research prior to. We were inspired to get into real estate because it was a fairly easy market to break into, and we felt that the risk level was lower than many other investments. That May, we purchased a property in the Temple University neighborhood with intentions of renting the 4 bedroom unit to Temple students. At that point, we thought that we would be up and running by January of 2014. Already six months beyond our original goal, we are still adding the finishing touches. Obviously things did not go as smoothly as we had anticipated. No worries though, we’re getting there slowly but surely!

I thought I’d document our experience and share it with you all, so that maybe you could learn from our mistakes. Two of biggest lesson that's we've learned up until this point are:

Lesson #1: We under estimated how much was really needed to fix the property we purchased. Take a look at the condition of this home. We spent just over $25k to buy it. In hindsight, my dad and I agree that it probably was worth maybe half of that. Reason being is we practically had to redo all of the major systems, including Central Air/Heating, electric and plumbing. Had we gotten a real appraisal prior to purchase we may have been in a better position to negotiate the price. But because it was a cash purchase they seller did not allow us the opportunity to have an appraiser come in, which I can now see was a RED FLAG!

Before the renovations pictured below:



Lesson #2: The loan for the property was based on the purchase price rather than the appraised value because we applied for it too soon after we purchased it. We opted for a home equity loan to fund our renovations. Most banks will give you around 80% of the value of the home for an equity loan. The particular bank that we got our loan through, failed to mention that our loan amount would be based on the price that we purchased the home instead of the home's actual value, because we applied for the loan within 6 months of buying the property.

Some renovations pictured below:



As things continue to progress, I'll be sure to give you more of my lessons/Do's & Don'ts... If you have any questions or advice even, fire away!