New Financial Route

My new beginning started exactly two weeks ago, when I signed the purchase agreement for my first investment property.

And it feels unreal. This purchase had been in the making for about two months (two years really), but it’s one thing to think about buying a rental or just do research on YouTube and BiggerPockets and another thing to, well, actually buy one. There are a million thoughts racing through my head right now to be honest, but maybe I should start with a bit of background to get you all caught up to speed!

How I decided to purchase an investment property.

A more detailed explanation for why I decided to invest in real estate will be for another post, but the main reasons were tax benefits, opportunity for leverage and the inherit desirability of a hard asset. My original plan was to finish renovating my home (which I bought in 2020) to be able to do a cash out refinance and use that money to buy a second property. Unfortunately, the Fed’s interest rate hiking cycle had a different plan for me. My other idea was to get a HELOC, which I probably will still do but not at this moment as there are a few more bigger items on my home improvement to-do list (I still need to renovate my bathroom, for example).

Instead, I decided to use the money I’ve saved over the past few years along with the proceeds of some of my company shares. I almost never sell stock, but I decided that this was the best choice for me to be able to start my business.

The Search

With the needed funds for a 15-25% down payment by mid-March, I was touring houses and submitting offers almost weekly with my realtor. Unfortunately, the current seller’s market made securing a deal difficult: every house that I wanted to buy either was bid over asking or was sold in days before my agent and I could even write an offer! The high asking prices also didn’t help.

I checked Zillow several times a day; I subscribed to wholesalers’ mailing lists; I browsed Craigslist listings. Still, nothing came up.

That was until I found an email sent from a wholesaling company on 5/10 for a triplex not far from my primary residence. The price was solid, too. After completing my due diligence, it appeared that I found a deal that checked all my boxes. Good cash on cash return? Check. Good ARV? Check. Good rental comps? Check. I contacted the wholesaler promptly and he invited me to the viewing on Friday (5/12) at 2PM.

I arrived to the house to find groups of people already in and out of the property. Oh man, I thought. This can’t be good. If there were already several people who showed up at the viewing for an off-market property within just a couple days, there would be a lot of competition to get the deal.

The viewing itself simply confirmed what I saw in the photos overall. I knew a lot of work needed to be done; the viewing was more of a formality. But the price was right and the building had a lot of potential. I needed to move quickly with an offer.

I raced home and reviewed my numbers quickly. I sent a text message to the wholesaler just a couple hours after the viewing and told him I was interested in moving forward. The response I got was nerve-wrecking, but not a surprise:

Multiple offer situations always give me blood-rushing anxiety. It’s hard to figure out how much to offer, and a decision has to be made quickly — there’s no time to waste. And by the time there’s a multiple offer situation, there’s only one chance to make a winning offer. But I was determined to not lose again, to not get outbid. I submitted an offer over asking (but one that would still work within my investment return parameters), along with proof of funds, through email and hoped for the best. Still, I kept doubting myself. Is the price I offered really what the property is worth? Was I offering way more than the other investors? I checked my numbers again and again.

At this point, there was no looking back. I received an email and text on Saturday from the wholesaler that they would get back to me on Monday:

Holy crap!! Did that mean that I had the winning bid?? The response was vague, but I assumed that it would’ve been different if I didn’t have the best offer. I started to feel that same heart-pounding mix of anxiety and excitement that I felt when I submitted my bid. But I’d have to wait until Monday to know the outcome for sure. An entire day. 24 entire hours!

The Result

Finally, Monday morning came after what felt like an eternity and I received a call from the wholesaler. He asked a bit of information about myself. I explained that I was a first-time investor. More importantly, he then confirmed that I had the winning bid! He explained the closing process and how he would be in contact weekly for updates. I received and signed the purchase agreement promptly.

So there you have it. I’m excited to start this journey — and share it with you all — but I’ve never done anything like this before. I’m sure this new adventure of mine will come with highs and lows, along with a ton of learning. But I’m going to try to make this work — this new financial route.

I’ll share more specifics of the deal, along with pictures, once I close.