Brace yourself, it’s hot stuff!
In my ~ 4 good days this year, my friend and I put our heads together in a massive information dump. He taught me everything he could about his investing plans which we’d been discussing on and off for a few years. Once I felt on relatively firm footing, he put me in touch with the people he’s done business with and if you ever doubt the value of a great referral, well, don’t. I was well taken care of and due in large part, I’m sure, to the email that said I was his “VERY good friend, so take care of her.”
The strategy was basic:
1. Find a property in a good neighborhood with good amenities at a decent price;
2. Rent only to the best possible tenants [steady income, good references];
3. Maintain the property well, and if the value steadily increases, eventually sell it.
4. Result: Rake in the income. [Hahah... no, not really, as you'll see.]
My loan preapproval only hinted at the paperwork nightmare to come. I’d asked about what sort of documentation would be needed so that I could prepare it ahead of time but irritatingly, the broker didn’t tell me until he needed everything yesterday. Nevertheless, the preapproval was completed really quickly and we were off to the races.
We vetted more than a couple dozen possibilities and I was prepared to take several more weeks in trying to find the right fit but in surprisingly short order, much much more quickly than I expected considering we had to raise my initial ceiling on how much I wanted to spend, we were able to place several bids.
[See what I mean about the value of energy? If I had a few months of that stuff, I'd be flying high!]
The “favorite” of the four, ideally located and best-priced, required a bit of back and forth, but nothing critical. The property wasn’t perfect, what ever is? but it was fine for the purpose: renting it out for income.
I then spent the next week digging out every piece of possible paperwork they could demand going back two, sometimes three, years and discovering that my records weren’t actually as good as I thought they were – it’s both humbling and frustrating to realize how much better my recordkeeping needs to be.
Another humbling realization: Buying outside the hotbed of Bay Area real estate is a huge eye opener. Properties elsewhere look ridiculously affordable in comparison. I had the down payment sitting in my bank account! Now we’re neither rich nor poor, we’re somewhere in the middle. But if I were to try and buy here? I’d need ten or twelve more years of savings, roughly.