Buying property is very cash intensive. You literally bleed out money in the buying process and maybe even after that. There are costs that you can anticipate like paying for inspection, appraisal, transfer tax etc. But there are so many things that could come up that literally will take a huge bite out of your cash reserves. This is even more likely to happen in a seller’s market which is what the market in my area currently is. A seller’s market is when there’s less supply and more demand making the seller the ultimate shot caller in the negotiation. My last two purchases happened during a buyer’s market when the supply was high and demand relatively low so I was negotiating down the price of the property and asking the seller for all kinds of help with paying for these expenses. Well, the shoe was on the other foot this time.
My offer was for a property in the working class neighborhood I grew up in. The property needs some work but was in good condition. I had seen it on the market a few months prior and did not put in an offer because I thought it was overpriced. It was. The seller ended up reducing the price by $20k. So this time I offered and yes my offer was grounded in reality. The price I was willing to pay was $15k less than what the property was listed for. This is my neighborhood. I knew there was no way property could sell for that amount in this condition. I got rejected promptly. Someone else was willing to pay above the price it was listed for. The realtor didn’t even want to speak to me for long on the phone. And the reason he gave me could be summed up as “you don’t have enough money” I was sad but I could not put myself in a strenuous financial situation just to get the property. I backed out.I came to terms with the reality that maybe, at this time, I’m just a little too poor to try purchasing property. And then something magical happened.
A week after my offer was resoundingly rejected, I got a call from the agent that tried to snub me. He said his seller had some conditions but was willing to accept my offer now. It turns out, the other buyer wanted upgrades and changes that would cost the seller both time and money she didn’t have. So here I am.
Here are the steps I plan to take after completing the closing process and getting the keys.
-Have a working bar-be-cue housewarming – Yes you read that right. I’m going to ask my friends to pitch in on work such as ripping out old carpets, staining cabinets and painting. As a thank you, I would have a barbecue. The cost of hosting a cookout is nothing compared to what I would have to pay for labor.
-Find additional side hustles to cover unexpected costs- Because of the age of the home, I’m counting on some unexpected issue coming up and costing me a large sum of money. It is essentially inevitable in a home built in the 1940s. I plan on increasing my marketing to attract home buyers that are looking for a realtor. I will also increase my translation workload.
-Find a contractor I can trust- This is so much more easier said than done. But luckily for me, I know a few people I can ask for referrals. I plan on getting 3 quotes from the referrals and comparing their cost, time frame and workmanship. This is the most immediate task and possibly the most difficult.
I’m a bit overwhelmed since this will be my first renovation but also excited. This is one step in the direction of having income that will solely be dedicated to paying off my student loans. I’m hoping I’m right in picking real estate as a way to generate cash and will buy additional property if this proves to be worth it. Here goes nothing…