I want to tell you about how I got started "investing" in real estate. And I say "investing" lightly, because it's not like I've bought and sold a hundred houses. We're on #7 in 7 years, and 4 of them have been houses we've lived in. So yeah, not a great repertoire (can you use that word here?). Take from it what you want. But I think all beginners have something to learn from this...
The year was 2006 and the real estate market was booming. Houses were selling as soon as they were listed and they were going for top dollar. Everyone thought it was a great time to start investing because nothing could pop this real estate bubble.
[insert hindsight laugh]
I had finished just finished college and was still looking for my dream job (at least one I didn't hate). I moved from my apartment with roommates to a basement apartment with my cousin/friend/Realtor. And what came next on the list? Buy a house, of course! I mean, I could only make money with it.
So we looked. And looked. And looked. And found one that was in my price range. So I made an offer.
I got this beauty (let's call it 376 W) for $136,000. It was on .07 acres and only had on-street parking. There were 4 bedrooms and 1 bathroom. One. Tiny. Bathroom. But it was mine.
The deal closed on my birthday in 2006 and I slept on the floor that night. I had a house! I was a grown-up!
My mortgage broker was friends with my Realtor (who is my 4th cousin) and liked DIY so he surprised me and over the weekend when I was gone, he painted the bedroom and scraped off and refinished the popcorn ceilings all over the house. I don't even want to know if there was asbestos in them, which there probably was and it's illegal to DIY that.
So I painted the rest of the inside of the house and replaced the carpet downstairs. It went from dungeony to not so bad. The ceilings downstairs were 6 feet high so it wasn't a place for everyone.
I had some friends become my roommates and together we paid the mortgage. It was $900/month then because the prime interest rate was 6% (it's around 3.5% now).
Then I decided to see what I could sell it for. I'd fixed it up. The market values had gone up. I was hoping to make $20,000. So I put it on Craigslist for $160,000.
I got a response. I don't know how many offers there were but I remember one of them. It was another investor. He offered me $145,000 cash, or $160,000 if I would seller finance it. Well, I wanted the money so option 2 was out and I wanted a lot of money so option 1 was out too. I turned him down.
And that's something I kicked myself in the butt for for years. Seriously, years.
A couple of months later the market went south. Not just south for the winter, but south for, well... is it out of the South yet?
I got married and moved to my husband's house about 30 miles away and I tried to sell my house with a Realtor. Then another Realtor. And another. A year went by, then 2, then 3. We moved to another state. It was not stress-free time. I mean, we weren't doing bad financially but an extra $900 a month just for a house that was losing value and sitting there empty really sucked.
We tried to rent it but had a bad experience with a property management company where they couldn't seem to find anyone to rent it to for months and I still had to pay them a thousand freaking dollars! So as stressful as it was paying for the house to sit there with a for sale sign, it was less stressful than dealing with more people.
Finally. FINALLY! We used one of Dave Ramsey's endorsed Realtors and he found a person to lease with the option to buy. That worked for a few months, then the guy couldn't pay and moved out.
So it was sitting there all empty again. Then a miracle happened. It got an offer. Someone offered to buy the now thorn-in-my-side house that was so cool a few years earlier.
The offer was for $130,000. We would be losing $6,000 from what I paid, but we had already lost thousands from it being empty for so long. We didn't care. It would no longer be our problem so we jumped on that and were happy to fork over the money!
The moral of the story: Don't be greedy. I'm sure you got that from the title. But for real. If you want to sell and get a good offer, don't wait for a better one. Unless you don't mind waiting years. Then don't accept the offer. Usually the best offers happen within the first month or two. Keep that in mind!
And know that as much as your house means to you, it's probably not worth that to anyone else. Memories are not for sale. If you think it's worth $300,000 and your Realtor thinks $250,000, it's probably closer to $250,000. Don't feel bad. It just is how it works and everyone thinks their house is worth more.