OfflineHi DG family - This is our first post. We are new to investing and just completed our first deal, a double closing, this past Monday. It was a great experience and we are so excited to be real estate investors.
Yesterday we were able to get two more properties under contract. Both have tenants already in them with great cap rates. Both tenants are Section 8. On one of the properties she listed it as a 1 bedroom just to make the payments work for the tenant even though it is a 2 bedroom property. The lease was just renewed Nov 1 (we close Nov 30).
I am not very familiar with Section 8. Will it be hard to recategorize it as the 2 bedroom that it is? Will we have to wait 11 months until it is time for a new lease or since we are new owners can we review/revise the leases currently in place? Thanks for all your insights.
Happy Investing.
Nicole and David
Hi Nicole and David, I have a lot of tenants that are on section 8 and before you go and talk to the Housing Authority I would talk to the tenant first. You can correct the way that they categorized the apartment but if the tenant is not approved for a two bedroom you can get her into trouble and find yourself looking for a new tenant. Being that its not a two bedroom apartment by section 8 you are losing money every single month. My advise, ask the tenant first and if your not satisfied with her response then speak with herHousing Advisor. Good luck and keep us informed.
Thank you Zae
Hi Nicole and David Congratulations on your first deal. I have a questions you said you did a double closing. Did you have to pay double closing fee's? I assume it was a wholesale and that is why you did a double closing. did you factor in your closing cost and profit to come up with your offer to lock the contract in then wholesale it? how much did you make of on the deal if you do not mind me asking?
Thanks
Maria
Maria
"Thoughts create words, Words create actions, Actions creates dreams"
Hi Maria-
We are so excited with our first deal I don't mind you asking at all! It was a FSBO that a woman owned free and clear for over 20 years. It was a 1924 home and she just couldn't keep up with the maintenance and didn't have the money to remodel. We got it under contract for $50,000 net (we paid all closing costs). Then we put out bandit signs to sell it for $52K. Over the weekend the house next door that had been remodeled posted on the property appraiser website as being sold a month earlier for $145K. Since this home was larger with a bigger year and garage we wound up getting multiple offers all over our asking price. The top two offers both came in at $58K. We asked if either would be willing to go any higher as the offers came in at the same time. One buyer went up to $60,500 net (we didn't pay any closing costs). It was then that we decided to do the double closing. In the end we cleared $9000 all on our first deal!
David and Nicole
Hi Zae-
Thanks a lot for the insight. That is a great idea. We are going to get a copy of the lease today so we can then talk to the tenant. I certainly do not want to get her in any trouble, but I don't want to lose out on cash flow either! The numbers work even with it miscategorized (~14% cap rate), but they are extraordinary if we can get it changed. Our closing is scheduled for the end of the month so I will keep you posted.
Thanks!
Nicole and David