Single-family residence buy & hold investment.
Purchase price: $48,800
Cash invested: $23,500
This was an off-market deal that one of my team members found. The seller owned three of these condos and wanted to sell. We put together a package deal with assignment clauses for $151,500 (including buyer commissions). We then assigned one to me, one to my team member, and one to a previous client. My team member and I (both licensed agents) then negotiated our commissions out of the deal to drop our purchase price to $48,800.
I spent $10,200 completed renovating my property and we got a tenant in there for $895 per month.
Financing: I used a 5 year commercial balloon note to purchase the property. 25% down, .5% origination fee plus a $400 appraisal. I came out of pocket for all of the repairs.
I currently pay $252 per month for the mortgage and $200.00 in HOA amenities (this also covers insurance) for a total of $452 per month in cost. The entire condo has been renovated so I don't anticipate a ton of maintenance cost in the coming years. That being said, after taxes I anticipate around a $400 per month cash flow.
What made you interested in investing in this type of deal?
We manage 45 of these units already as well as the Association itself. I knew the returns and the value going into the deal.
How did you find this deal and how did you negotiate it?
We found it by filing dispos at the courthouse. The owner of one of the units was there and a conversation gave us the lead. We spent several weeks negotiating down from $55,000 per unit to $151,500 for all three units.
How did you finance this deal?
Local credit union. Commercial loan. 25% down, .5% origination fee, and a $400 appraisal fee.
How did you add value to the deal?
I completely rehabbed the unit and spent about $10,000 doing such.
What was the outcome?
I rented the unit for $895 per month and plan to hold onto it for life.
Lessons learned? Challenges?
Rehab costs were more than predicted. Once knocking out cabinets and vanity I discovered mildew which lead to removing and replacing Sheetrock and insulation. I also learned to not take on this type of rehab costs while your wife is 39 weeks pregnant. haha
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
I am an agent so I negotiated the deal myself along with a team member in my office who purchased one of the other two units.
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