Home #3: 2201 Westhill Drive, Fayetteville, NC, 28304
Investment Info:
Single-family residence hard money loan investment in Fayetteville.
Purchase price: $92,500
Cash invested: $30,000
This was the third transaction we did to grow our porfolio. Since we started buyig homes we got the following options so far: first home it was purchased with an FHA loan, we fixed it, live there and next we purchase a second home, with a conventional loan with 5% downpayment. Afer all repairs were completed we rented first home, moved to the second and for 6 months were house hacking renting one room in the home we were living. Third home we purchased using creative financing. Thanks to the podcasts and books we've studied in the last year we assumed the risk and went in the deal. We bout he home using a bridge loan from a hard money lender, 85% purchase price and 100% repairs. For downpayment we used a personal loan and borowed money from family. It took about a month to close the deal, one month to do the repairs and in September the house went on market and got rented. We started to do the work for refinancing and we got first apprasal too low. After we ordered the second appraisal the number came close and by the end of this week, first week of december we should be all set and refinance complete. Since we bought the home we are stil not cashflowing until we get refi, meaning interest payments are $780.00, monthly property management fee $121.50 , personal loan $480.00 makes a total of $1381.50 what is $166.5 short from the monthly rent of $1215.00. After refinancing our monthly mortgage, tax and insurance will be $600.00 rest of the number stays the same and the cashflow will be 20$ once the personal loan is paid it wil be $240.00. On first look this transaction does not look like a home run, however having one more rental, the difference is covered and in long run it makes sence. We bought it retail price, lesson learned, looking forward to buy many more and this time buy it smart.
Let's connect and let's see what do you think about this transaction, where can be done better, improve and get better results in order to recycle the money over and over.
Your Truely
Ion M Cerga
What made you interested in investing in this type of deal?
I had tenants coming in and we ready to rent it by bedrooms. It made sense to take the property, fix it lightly and start collecting cash flow.
How did you find this deal and how did you negotiate it?
I find the deal on MLS. The financing went complicated and in the end we got a price reduction from $96k to $92.5k.
How did you finance this deal?
Personal loan, borrowed money from relatives and hard money.
How did you add value to the deal?
We put $22K to $25K in Rehab, later I understood it was way too much.
What was the outcome?
House is rented and once the personal loan is paid will get $250.00 cashflow onthly if i will manage myself it can go up to $390 montly cash flow.
Lessons learned? Challenges?
You win the money with real estate when you buy it. When buying a home ne to make sure that we purchasing the home under the market value, do not over rehab.