Buy & Hold in Phoenix

3 Replies

Investment Info:

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?

1031 Exchange:
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.

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. 

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