As I alluded to in my last post something came up that was going to force us to take break from our current duplex project.  Near the end of the demolition phase we discovered my wife was pregnant!  This will be our first child, and we are pretty excited.  With this news we just had to slightly reconfigure our plans.  The news has not changed our saving and investing plan any, on the contrary it has reinforced them!  We now want to continue even more devotedly so we can spend more time with our little one before he or she are grown up and moved out!  However, with a child on the way we needed a more stable living situation than a small apartment, a duplex in progress, and driving over an hour one-way to work (for both of us). 

Since we bought our current duplex with cash we had no mortgage so this seemed like a perfect opportunity to add another property to our portfolio.  Yes this means delaying income production on our current duplex project, but since there is no mortgage then at least then only money loss is taxes, insurance, and the potential income.  Our apartment lease was up in August and we found out the news in early April so this time we needed a place that was livable almost immediately.  We decided to move right into Pittsburgh to give us more “close to home” work options as well as better real estate options.  My company actually has an office in Pittsburgh and so I talked with them first and they agreed to just let me work out of that office and my wife was also able to move with her work to Pittsburgh as well.  So everything was in place, now we just needed to find a house…

We focused our search on only homes that could be multi-family, so that we would essentially have a portion of our mortgage paid by a tenant increasing our ability to save and invest more of our income.  To search for these I found the best method to do so without missing too many was to filter based on 2+ bathrooms and 4+ bedrooms.  Much of the information in real-estate listings can be inaccurate or just blank, but I found these fields are fairly consistently correct.  On a side note it continually amazes me how lazy and bad some real estate companies and/or agents are.  Between inaccurate information, not responding to phone calls and emails, and rude demeanor I am not sure how some of them make a living.  We actually ended up working with the same realtor as we had for our first duplex even though he was over an hour away just because of how bad many of the ones we tried in Pittsburgh were : /.  Anyways, that search criteria along with an upper price limit (ours was 150K) was the best method I found.  I would then just go 1-by-1 through that list marking all the potential multi-family homes (both currently multi-family and easily convertible).

Looking in a big city was sooo much nicer than in smaller ones.  Even though multi-families are a bit harder to find we still found many options right away.  We looked at several over the first couple weeks, but found no winners.  A few went under contract before we had a chance to think about making an offer.  Many were fully tenant-occupied meaning non-starters for us since we needed to live in it.  A few were in too rough of shape being that we already had one big project house and needed something livable.  And 1 we really considered (my wife loved it), but the location was not very good and it was actually 3 separate log cabin style buildings so we decided against it.  We kept looking though and after another week or so found something that would work perfect for us!

It was in a pretty good neighborhood, a few miles from the city center, close to work for both my wife and I and as a bonus a block from a main bus station.  It was already an up/down duplex with the owner downstairs and a tenant upstairs.  It was an early 1900s home, but was in pretty decent shape it just looked like the current owners had been slacking on the maintenance.  They had recently dropped their price by $5K so we put in an offer a few thousand lower than their current asking which they quickly accepted.  We had an inspection because it was hard to see everything that might be a problem since the house was completely occupied.  Nothing big came up in the inspection that we hadn’t seen, but we used the results to negotiate the price a few thousand lower due to roof quality and also got them to perform termite treatment before closing.

We had originally figured we would go FHA since that is allowable on up to a fourplex, as long as it is your primary residence for at least 1 year after.  This would have allowed us to purchase with very little down and keep more of our money for fixing up the 2 properties.  As I stated earlier however, the home definitely needed a bit of work and things such as chipping paint and plaster and broken railings would have caused FHA inspection failures.  We went with a conventional with 15% down instead to avoid any problems.

We used one of the big box mortgage companies because the local ones wouldn’t allow less than 20% down on the place and we were looking to keep as much money in hand as possible.  This turned out to be a pain in the butt and they requested pretty much every document to my name multiple times.  And during the bank appraisal they decided I needed to first have the porch roof replaced.  I don’t know why exactly that matters to them and I tried to convince them to let me just do it after purchasing but that was a no go for them.  So I unfortunately had to take a risk and fork out $1700 to have that replaced by someone before closing. This is dangerous because had the sale fallen through I would have basically been out this money, but the owners had no cash and any sane roofer wouldn’t take on the risk to be paid after the sale. However, at this point everything else had been approved besides the bank appraisal so the $1700 wasn’t worth the hassle of delaying closing trying to work out some contract protecting my investment or cancelling the sale and starting over so I took the risk.  Overall it was an irritating trip but we finally made it through to closing!

On closing day I walked through the place and I was not very happy about the state of things.  The upstairs, which had been tenant occupied, was fairly cleared out, just dirty.  The upstairs tenant had moved out since their lease was up, which was fine with me because it gave me the chance to fix things up there.  The downstairs was filthy and there was stuff all over still!  The current owners were buying another place using the proceeds from this sale and so they couldn’t move until the day before, so there was stuff they didn’t take and trash everywhere and very little or no cleaning was done!  I was angry but once again this was not worth it for me to delay the closing by refusing to receive the property as is so I just grinned and bore it.  If I wasn’t such a non-confrontational person maybe I would have said something haha, but that is not me.

The closing was mid-June and I was able to convince our landlord to let us out of our lease starting July 1st.  That gave us time to take care of things at the new place downstairs such as painting and floors.  However, since the place was such a wreck we instead spent this time cleaning everything extremely well and getting all the trash out!  It was pretty nasty, when I was cleaning the basement I kept saying to myself “What’s that smell?”  Finally under the stairwell in the basement I found the cause.  Their cat seemed to have decided to use that area as litter box and there were several piles of cat poop under there : /.  We used lots and lots of bleach and ended up with a huge pile of trash in the yard.  I think they cleaned the house real good for the showing and then once the sale was agreed upon didn’t clean one thing from then on!

We spent the next couple weeks, between work, cleaning the place and then we got ourselves a U-Haul and moved all of our stuff from our apartment.  We wanted to paint and replace some flooring before our things were in the way, but that would have to wait as we were out of time.  I had convinced our current landlord to end my lease 2 months early pending they could find another tenant and they agreed, so we had to be out by the end of June and closing had been June 15th. After we got everything moved we then used the U-Haul to haul that giant pile of trash that we had thrown in the yard cleaning out this place over to our first duplex where it could stay until we got our next dumpster there.

Now that we had the place and were all moved we didn’t have to be so stressed about our living situation with our little one coming.  Now we just needed to get this place fixed up as quickly as possible so we could get back to work on our original duplex!