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Monday, October 03, 2005

Philadelphia Investment Update #6 - Closing Day

My schedule was really crazy today. I woke up before sunset this morning and traveled more than two hours to Philadelphia. I got to Philly around 10am but my house closing appointment is at 11am. My agent picked me up from Philly and drove me to the house for a pre-purchase inspection. We were running short of time so we took a quick look at the house and recorded the water/gas meter readings, and then we rushed to the title company. In the office we all sat down around a huge table. The sellers and several other people were there as well. There were stacks of paperwork on the desk for me to sign. A few hundred signatures later, I was finally done. I have officially become the owner of the house -- my first house.

  • House Value: 142,000
  • Down Payment: 28,400
  • Mortgage: 113,600
  • Closing Fees: 8,100
  • Total Cost of House: $150,100
  • Mortgage: 113,600
  • Interest Rate: 5.75%
  • Monthly Payment: 662.94
  • RE Tax: 105.83
  • Home Insurance: 41.08
  • Total Monthly Payment: $809.85
I also got $810 of rent for the rest of the month from the seller. I paid my current agent a fee of $600 to find a future tenant. Hopefully, I can get at least $900 of rent and there will be no problems with the house. I've now joined rank with the real estate owners. Kudos to my first investment home!


At 10/04/2005 06:16:00 PM, Blogger savvy saver said...

Why were your closing fees $8,000?!?!?! Did you buy points? When I bought my house, my closing costs and fees were less than $1,000.

At 10/04/2005 07:02:00 PM, Blogger Smarty said...

No points. There were just a lot fees for here and there and they added up. Also, I had paid all the RE taxes for the remainder of the year in the closing fees.

At 10/04/2005 07:48:00 PM, Blogger ncnblog said...

Ummm...While I think it is great that you are "investing" in real-estate...a 1200 dollar annual return in rent on what you have already spent seems very small to me...also, you dont' "own" the house, you are "buying" the house....
I really, really hope this goes well for you, and you make some mega-cash, but it seems that you are taking on a considerable debt-risk with very, very minimal returns...

At 10/04/2005 09:20:00 PM, Anonymous pfadvice said...

I too wish you well in your adventure. As you will find out, there are a lot of hidden costs that come with property management, and a $100 profit on paper between rent and your cost is probably going to put the house into a negative cashflow for awhile.

If nothing else it will be a learning experience for you. Hopefully appreaciation will help offset some of those costs and you'll come out well ahead in the end.

Keep us up to date on this. It will make for an interesting case study to follow.

At 10/30/2005 02:04:00 AM, Anonymous Jonathan said...

I invest in RE vicariously through you and other RE bloggers =), so I love updates. Keep it up!

At 10/31/2005 08:24:00 AM, Blogger Belasarius said...


What are the terms of your mortgage? 5.75% is good, is it fixed, if it floats, what's it pegged too?

What are the appreciation potentials for property in that area?

Good luck, and you were smart to get a good manager. I had a very good result with one myself.

At 10/31/2005 09:20:00 AM, Blogger Smarty said...

The mortgage is a 30-year fixed loan at 5.75%.

The appreciation has been very well in the past two years but it's slowing down now.

I'm planning to hold the house long-term so I'm not worry about capital appreciation. My primary focus is to generate rental income and have the mortgage payments covered.


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