2nd Buy and Hold - Residential Property

[Jeffrey Gignac]

I've successfully owned and managed a cash-flow positive residential property since 2012. After paying down personal and mortgage debt and getting my financial ducks in a row, I have begun the hunt for another house in the same general area as my 1st house. I am looking for similar specs in size, amenities, purchase price, etc. so that I may duplicate the blueprint from my 1st house as close as possible. My ideal property is a 3/2 or 3/1.5 that could be easily converted to a 2 full bath house. Both a small university and a reputable elementary school are within walking distance of my first property. Like everyone, I am interested in getting a deal (it is investing after all), but my largest concern is the speed with which I can turn a new purchase into a cash producing property. 

I've seen one property that meets this criteria that has been on the MLS for over 500 days!!! It is a classic victim of having been bought right before the bubble popped and the owners have 0% chance of selling the house and getting what they paid for it. To boot, the owners have not lived in town for several years and long distance landlording has not gone well for them. This is information gleaned from neighbors and close associates who know the owners.

Rents for the area in question are trending up and comps are being rented for over $1,100. My first property is on the same street and is renting for $900, which I will use as my assumption of rents for conservative estimates on the project. Paint, wood floor refinishing, and a small section of water damaged ceiling are the repairs noted from my first walk through with my agent. My realtor is currently doing homework to learn more about the property for things I would not see on first glance. I'll be giving this property my 2nd walkthrough next week and after nailing down renovation costs, would like to make an offer. I will keep this post updated and any thoughts, comments, or questions are appreciated!

JDG