I met the loveliest young couple a few years ago. They were dating at the time, but marriage was fast approaching, I could see it in their eyes. They are both engineers, very smart and they were very focused on their goal of owning their first home. When we started looking at homes, we were in the price range of $600-650,000. They would easily qualify as their credit was as great as their demeanor, which quite frankly if I could give them a 1000 FICO score, I would! That’s how sweet and kind they are! We searched for properties, but nothing was really grabbing their attention. The search was inconsistent, they weren’t in a big hurry as they waited for something that would truly tilt their scale towards, “this is a must have”.
Our search continued for over a year, and we stayed in the same price range, and the same style of home, the plan was to find a great condo with room to grow. But just as we were preparing to write an offer on a property, the 4 unit building where they had been renting was about to be listed for sale. The only problem was that the price was nearly two million dollars. From $600,000 to $2,000,000 was quite a jump. I’ll never forget when they called to ask “Can we do this?” …. my answer, “Lets talk to our lender and see what she thinks”. Well we did, and just as I assumed, they actually did qualify with a little down payment help from their parents. Their credit and work history was perfect, and they more than qualified for a higher loan amount. Not in their wildest dreams did they think they would qualify for that much, but they did. We moved through the process, and submitted an offer which was strong, but we were competing with other buyers in a multiple offer situation. We had the extra pull we needed because my clients already knew the seller since they had been renting from him. You can’t always rest your laurels on that though, in the end, often times, the seller needs to close escrow with as much money as possible. All the buyers were put it in a “submit your highest and best offer” situation. This can be tricky because sometimes you feel like you’re countering to yourself, and you aren’t sure how high in price you should go to have the winning bid. This is when you really need to work with your agent, and support your offer price with facts; what has sold, what’s pending, what is this property really worth.
The best part of this story is that my clients won the bid, and that wonderful 4 unit property is theirs today. They live in one unit and rent out the other three. The rents that they receive cover the mortgage, but my clients are so smart that they actually pay rent to themselves so they can start chipping away at the principal. One day, they’re going to look back at this property and be so happy they purchased it because I’m feeling very confident that the loan will be paid off early, and they’ll be collecting a massive amount of rent for each unit, which will be wonderful for their retirement income.
On the day we closed escrow, I felt so proud of them I was about to burst. My last words to them that day, “Please, please, please never sell this property!” I just ran a market analysis on their property today. It’s worth $3 million, exactly one million more than they paid two and a half years ago. I seriously love this story! This is why I love real estate. It builds wealth when done properly, and when you have a good plan in place.