Single-family residence buy & hold investment in High Point.
Purchase price: $68,500
Cash invested: $24,000
3 Bedroom 1 Bath, hardwood floors, granite countertops, rents for $825. Strategy on this one was a light rehab, buy & hold for my first rental property. Including down payment, closing costs, and rehab costs, I was all-in for about $24,000. Main rehab was replacing some fixtures (blinds, oven, fridge) and generally cleaning up the yard. Getting about a 12% cash on cash return for my efforts.
What made you interested in investing in this type of deal?
I just wanted to get my feet wet--this one was a solid base-hit, nothing too fancy. But it met my criteria of 12% COCROI, light rehab, and <$25,000 all in.
How did you find this deal and how did you negotiate it?
MLS! Per my agent. Listed at 75, offered 65, countered at 70, agreed on 68.5.
Interesting part: turns out the tenant was taking both the fridge and stove (valued at around $1100 total). We called the listing agent and he offered $200 to cover it. I refused to close until they gave a decent credit to cover it (we agreed on the $1100). Ended up buying a used fridge/stove for $450 total and pocketed the difference.
How did you finance this deal?
Conventional mortgage-- 30 year, fixed, 5.25% APR, no points. Negotiated down from 5.75%.
Lessons learned? Challenges?
Buying a used fridge came back to bite me... tenant was in there for 3 weeks and the freezer went out. Costed $270 to fix. Probably should have gone with a new fridge, since I'm expecting there will be more problems in the future.
Biggest lesson: it took me over a year to save up the down payment, not to mention sacrificing my lifestyle to cut expenses. Taking this same route means I'd have to keep waiting a full year in between purchases. Because of this, I'm looking to do a BRRRR deal next.
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
Mike Carter with KW was extremely helpful with the process. He was thorough and caught items that I missed (ex. making the seller give credit for the stove).
Go Green Plumbing was excellent--they fixed some minor plumbing issues and gave me great advice for maintaining the place. 5 star service.
Alcova Mortgage was great, very professional, on the ball, and great customer service. I'll be using them as much as I can.
Congrats on the first step.
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