Still positive even in the face of a major first mistake...

1 Reply

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $146,000
Cash invested: $27,000

Original family home, but trashed by (now) ex-wife during last deployment to Afghanistan. Didn't know a thing about real estate investing and hadn't heard of Bigger Pockets. Took on $27,000 unsecured personal debt for a rehab, and put under management. Fair rent was collected but the property cash-flows in the negative due to the addition of the loan repayments on top of the regular carrying costs. Looking at either selling or refinancing at this point in order to fix this little problem.

What made you interested in investing in this type of deal?

It was something of a forced situation.

How did you find this deal and how did you negotiate it?

Originally bought as a primary residence for my family.

How did you finance this deal?

VA Loan Guarantee program. $0 down on the initial purchase, but then $27,000 unsecured personal loan at 7.5% for the rehab.

How did you add value to the deal?

Um...to be determined?

What was the outcome?

I have gained some significant equity over time due to appreciation, but the property has been negative cash flow to the tune of about $200/month. Outcome pending...

Lessons learned? Challenges?

I should have used a HELOC or other financial instrument directly tied to my equity in the home to finance the repairs. The use of higher-interest financial tools destroyed the cash-flow potential and made this a burden to carry rather than a useful investment.

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