Real estate Investing #2: Closing the deal
August 4, 2014
Part Two of the Real Estate Chronicle
The rush to get all the paperwork submitted for the loan approval kept me too busy to think much. There was all the checking of the fine print (hundreds of pages’ worth!), running the numbers, and signing document after document, but there was a moment right around the time I’d done all the paperwork and signed all the closing docs. A looooong moment, as I sat at my desk wondering if I was getting in over my head, taking on the responsibility of a loan and a property and renters and and and ….
Don’t get me wrong, I am absolutely hiring a property manager.
I can just about keep and maintain my own home, I also have Dad’s home to maintain and worry about long distance. Forget being a hands-on, DIY, LandLady! While the point of this is to make money, it’s also to make money in case my ability to hold my current 60+ hours/week job falls through. Killing myself on a semi-risky side gig would just be dirt stupid.
The fees involved in a real estate transaction are boggling, by the by. Having been around the PF block a few times, most fees weren’t a total surprise but they still seemed to add up ridiculously quickly. I’m reminded of all the times, in my 20s, I vowed to buy my first house in cash. Ah, youth!
Of the people working for me, I paid my real estate guy a fee ($400) upon completion of the purchase and the property manager is, of course, paid for services rendered. The mortgage guy was paid by the lender so I saw that fee, but that didn’t technically come out of my pocket.
Transactionally, there was: the appraisal ($575), the rate lock fee (aka origination charge), the title and title insurance charges, recording fees, and transfer taxes. Just to give you a SHORT list. Of course, the interest rate was higher as this was an investment purchase.
My monthly commitment to this property now includes: mortgage, insurance, property taxes, HOA and the property management fees.
There’s just something unsettling about making this big (for me) leap. Luckily, I had the support from my friend, as he answered all my questions and guided me through the process. The number of “is this normal” texts doesn’t even bear thinking on.
There was a bit of a lull between completing all the docs and arranging the down payment til we closed escrow and we got there in the end: I’m the proud owner of an investment property!
One of the exercises we did in the real estate course I took a while back was to calculate how much the purchase of a house (with specified mortgage) would cost our client. It was, shall we say, arresting.
You know, I think anyone who is going to invest in real estate might be well served by taking the course that runs up to a state real estate license. No law says you have to take the exam; just buy the books and go to the lectures. It really is an eye-opening experience — I learned an enormous amount that I didn’t even know existed. Very valuable for anyone who buys or sells a house or apartment, whether to live in it or to rent it.
I’ve done a lot of reading but I am always happy to try more, time permitting. Or rather, I will need to make more time to read up some more. Going to lectures isn’t going to happen, given my hermitage 😉 But books are doable.
[…] Real Estate Investing: Closing the Deal by A Gai Shan Life […]
[…] This time last year: We were closing escrow on the rental property […]