Today's email is going to be a little different. I just had an offer for a condo accepted and so I thought I'd break down what I've done thus far and what the next steps are (in true Learn Through Action style).

On Monday, I went and checked out a property that I had my eyes on for a bit. I decided to check it out after doing this Google search I use to find real rental rates. I saw that the rental rates in the area were higher than the monthly payments would be if I put 3% down.

So I contacted my agent (Diego Abregu) and asked him to pull real rental rates for similar properties. After confirming what I found myself, I went to go see how bad this "as-is, needs TLC" property was.

It definitely needs new floors and paint, the kitchen countertop is gross, and the windows are on their last legs.

Finding a rental property in Northern Virginia is tough. Prices are super high for single-family and townhomes, and condos fees will price you out of anything on the lower side.

We drew up an offer that was $8k less than the current asking price and $30k under the original asking price (which was what other units in the area typically went for).

So the final numbers: My monthly payment (including mortgage, tax, insurance, and condo fee) will be ~$1875. Rent in the area ranges from $2,000-2,200. The seller is covering the closing costs so I'm just putting down around 3% ($8,850) in cash.

Then I have to make the repairs. The counter, paint, floors, windows, and washer/dryer can easily move above $20K if I'm not careful. I'm budgeting $15K and ideally would like to get as close to $10K as possible.

I have to live there for a year since it's being bought as a primary residence. The primary residence loan allows me to only put 3% down (vs. 20%) and have a lower interest rate than if I was buying it as a rental property.

I'd like to make an attempt at doing some DIY improvements (like paint and a kitchen backsplash). No rush to make the place nicer than I would be comfortable living in.

Overall I think it's a fair deal. I think unexpected maintenance is going to make me negative in cash flow for a few months, but the return on equity looks good and, with the low-cost upfront, I have cash reserves to weather repairs.

What's next?

A ton of paperwork, the home inspection, appraisal, etc.

I'm going to be keeping a running list of the whole process on the website. I'll share the link with y'all next week.

Until next time!

- Aswin

learnthroughaction.com