Single-family residence buy & hold investment.
Purchase price: $205,000
Cash invested: $42,992
This deal was my first after really finding BiggerPockets, reading Gary Keller's Millionaire Real Estate Investor and narrowing my search criteria.
I had made my mind to buy quality homes that I would live in myself. 1980 or newer, Single Family Detached, 3 Bedroom, 2 Bathroom, 2 Car Garage, Single Story, 1200-1800 SF, in good middle class neighborhood, good schools, no private pool. I have more specifics but this was my criteria at the time.
What made you interested in investing in this type of deal?
I was looking for a distressed property: short sale or foreclosure. They were drying up all over the Phoenix Valley in 2015 and still are but I really liked the zip code 85085 for growth and the home was in a developing area.
How did you find this deal and how did you negotiate it?
Found on the MLS as a short sale.
How did you finance this deal?
Conventional 30 Year Fixed Rate, 20% Down; Profit from a previous short term Buy & Hold
How did you add value to the deal?
Updated/added new flooring, updated backyard landscaping, painted inside of home
What was the outcome?
Positive Long Term Cash Flow Play.
Looking into possible Refinance and/or HELOC soon with equity available
Lessons learned? Challenges?
You don't have to go bigger! I chose not to do a 1031 exchange because I was selling a property that sold for $210K and wanted to purchase something under $200K. Everything I read and everyone I spoke with said it couldn't happen. Come to find out I could have done a 1031. I would have simply owed taxes on the difference of the sold and new purchase price.
$10K Capital Gains Lesson Learned!!
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
I represented myself on this transaction. I am never too busy for your referrals!
When representing yourself in a short sale as the buyer's agent:
Figure out commissions on short sales early on. More often than not the buyer of short sales can't earn a commission. Be sure to figure this out early. I was able to get the seller's agent to provide a referral fee for my entire commission due.
Congratulations and thanks for sharing! How many short sales or foreclosures did you look at before choosing this one? And what made this one work?
Thank you @Jeff Kao !
Was searching on the MLS for months. Probably physically only viewed around 10-15 that worked.
#1 was fitting my criteria and location, location, location. The growth in the area has helped provide appreciation while always providing positive cash flow from day #1.
When you said “growth”, what metrics are you referring to? Thank you.
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