Single-family residence buy & hold investment in Humble.
Purchase price: $119,000
Cash invested: $25,000
3/2, 1776 SF (USA! USA!)
Appraised at $181,000 post-rehab
What made you interested in investing in this type of deal?
I have an old friend who persuaded me to buy wholesale deals using hard money to get started. It's a relatively simple process and works for beginners. I plan on getting more sophisticated and using other sources for BRRRR soon.
How did you find this deal and how did you negotiate it?
Wholesaler. I ran the numbers and they worked, so I didn't negotiate.
How did you finance this deal?
Hard money + conversion to 30 year fixed
How did you add value to the deal?
I rehabbed the property by cleaning out all the junk, repairing dry wall, misc. small handyman jobs, repainting the interior, re-doing tile on one bathroom floor, doing hardwood-style laminate throughout, replacing the butcher block countertops with laminate countertops, and swapping out a few appliances. We also needed to do some foundation work and some bracing in the attic (not really value-add, but still needed).
What was the outcome?
ARV is $36,000 over the all-in. Cash flow of $300/mo. That will work!
Lessons learned? Challenges?
Rehab was $10K over budget - get more accurate numbers early on.
I changed my mind on several things after submitting the proposal to the hard money lender, so I couldn't get financed on the long-term conversion for that. It did add value though, so it's not a total loss.
I stuck with a GC that was going SLOOOOOWWWW for too long. I fired him after 6 weeks (he got the drywall repaired and all painted...that's it). Next GC got everything else done in 3 days.
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
GC: http://www.anniedoesit.com/ Great work, fast, and actually lowered a price for me when the materials changed. Sounds like someone I will trust for future projects!
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