Single-family residence buy & hold investment.
Purchase price: $70,000
Cash invested: $6,000
We purchased this property as our primary residence. When we moved out of this property, we held onto it and decided to rent it out. When we first started renting the property out in 2016, we made roughly $50 in cash flow (after accounting for 10% vacancy , 10% realtor fee, 10% maintenance, 10% capital exp, and 10% property management (paid to ourselves)). Now, 3 years later taxes and insurance increases have eaten up all the cash flow since the market has not allowed me to increase the rent.
What made you interested in investing in this type of deal?
When we first bought the property, we didn't plan to ever use it as a rental. After my brother told me about BP, we decided to give it a try.
How did you find this deal and how did you negotiate it?
Since we purchased this house initially to live in, we found it using a realtor. We negotiated down the price a few percent and came to a deal.
How did you finance this deal?
How did you add value to the deal?
While living in the house, we made a few updates: we removed old paneling, we added a safe, and we repainted the house. We plan to remodel the bathrooms after our current tenant moves out to make the property more attractive to tenants.
Lessons learned? Challenges?
Taxes and insurance will increase, so I have to increase my rents or else I will loose all of my cash flow. Also, I have learned that most tenants really care about bathrooms and kitchens.
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
No, we would never use our agent again.
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