Single-family residence buy & hold investment in Decatur.
Purchase price: $48,000
Cash invested: $85,000
3/1 1580 sqft SF on large lot, with big backyard and detached garage and carport. The garage is 800 sqft, where a portion can be converted into a studio room with its own bath and massive closet space. The SF was converted into a 3/2 to appeal to a broader market and increase the value. Rehab took 75 days with a few stalls in schedule. Strategy is to BRRRR with obtaining a LoC with a bank that I have an existing relationship with.
What made you interested in investing in this type of deal?
This was the first deal that was presented to my from a wholesaler. The property is located near a hospital and a popular community area (Point Mallard Park). Also, we saw instantly the opportunity to add a bath that significantly increase the value. Which the appraisal came back at $120k, spot on from our comps and analysis.
How did you find this deal and how did you negotiate it?
Presented to me by a wholesaler. After inspection and running numbers, submitted offer (and accepted) $7k less than asking, based on key concerns identified in the inspection.
How did you finance this deal?
Cash deal. Partnered with a colleague who saw what I was doing with my first deal and was confident in our abilities. Partner provided capital for the acquisition, we covered the remaining costs.
How did you add value to the deal?
The renovation provided a remarkable finish. The significant value add was the conversion of bedroom adjacent to another (master) bedroom. End result was a master ensuite with 8 ft wide walk in closet. More value potentially could be made by running sewage to detached garage and converting that space into a studio apt. Waiting to obtain cost and may pursue this down the road.
What was the outcome?
A remarkable finish inside and out. Positive responses from surrounding neighbors as we maintained/increase the areas value. The property appraised at $120k. We are closing on our LoC for 80% LTV to use on the next project. Continuing to build rapport with the local bank with these kinds of turnarounds. The property is currently listed for rent at $1200 with 4 applications submitted after 5 days of being posted online.
Lessons learned? Challenges?
Contractors, contractors, contractors. Due to us converting a bed into a bath, definitely wanted to go through the permit process which was easy and the bldg dept are very gracious. However, the subs (electrical / plumbing) that were used didn't show up and caused delays. In the end, I had to write a letter to the dept that the subs abandoned the project, in order to get a new sub to pull a permit and finish the work.
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
Kristen Strickland at Iberia Bank in Madison. I have worked with her for a year now, building a strong relationship.
JD Crowson, my electrician who was busy at first so couldn't do the job, but came back in the end to cleanup and see us to the finish line!
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