As we left Hawaii, I overhauled the way I was managing my properties and went from being anti real estate to becoming fully focused on buying a house at our new duty station. I only surrounded myself with realtors who understood the Real Estate Investing game and helped me better understand how to crunch numbers.
I start to calculate how much I need to save up for a downpayment on a house, and start setting a budget for what we can spend. Once I’m comfortable with my numbers, I start strategizing on how much we can spend on the rehab for the house and targeting areas that are close to work, with great schools and appreciating property values. I’m looking for properties with potential to rent out the basement, build a separate Accessory Dwelling Unit (ADU), and update to significantly increase its property value. This means old houses, hoarder houses, cat houses, etc. Basically the houses that no one wants.
For a $500K house, 5% down is about $25K. Aside from liquidating emergency savings or borrowing from my retirement accounts, we don’t necessarily have an extra $25K to spend. So where do I come up with $25K fast? Ironically, the one thing that’s working to my advantage in saving up a downpayment is COVID.
We’re only a few months into COVID and banks are offering payment assistance or freezing payments until customers are able to get back on track once the pandemic settles. I take advantage and freeze a few major bills. Then I invest it into the stock market. The stock market is ironically doing well and at an all time high. Looking back, this was extremely stupid to do but I got lucky.
I’m listening to real estate podcasts on the way to work, and I’m searching for properties online and crunching numbers while doing my day job. My co-workers are also looking for homes, so I’m surrounded by real estate talk all around the clock. I listen to another podcast on the way home and then I’m reading books before bed. I’m freaking obsessed.
The housing market is freaking crazy. Houses are lasting less than a week on the market and sellers are at a distinct advantage. Competition between buyers is fierce and basically the only way your offer is competitive is if you waive all contingencies or buy in full cash way over asking price. At one point, we lose a house in a bidding war after 30+ offers and $130K over asking price with no contingencies. It took 9 months, a ton of patience, numerous offers and lots of negotiation, but we eventually land a fixer upper.
Now the real adventure begins.