Single-family residence buy & hold investment in Tacoma.
Purchase price: $300,000
Cash invested: $10,000
I bought a property with a 450 sq ft home on it, tore it down, subdivided it and built two new homes. I sold one home and kept the other which eventually became a rental.
What made you interested in investing in this type of deal?
I always wanted to invest in real estate and I had a dream to build a better home for my grandparents. They were pastors most of their lives and were below the poverty line (always giving to others at their own detriment). My intention was to sub-divide the lot, build two homes and sell one. The profit from the sale would then cover the cost of the second home where I could then allow my grandparents to live.
How did you find this deal and how did you negotiate it?
There was a 450 sq ft house on this lot that I had rented while putting myself through college. I got to know the landlord and made them an offer after graduating from college.
How did you finance this deal?
How did you add value to the deal?
Subdividing the lot and managing the construction of the two new homes.
What was the outcome?
I learned a lot! Overall, I had more overages than I had expected and had trouble finding good contractors (they were all booked out). The contractors that were available made many mistakes that ultimately added to my cost. In hindsight, I should have spent more time planning the construction and managing the work.
Lessons learned? Challenges?
Spend more time planning and projecting costs! I should have double-checked my projected building costs with other builders and lined up the contractors before starting.
That's a great deal! On a percentage basis, how far off were your projections?
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