Skip to content
Real Estate Deal Analysis & Advice

User Stats

6
Posts
7
Votes
Joshua Schindlbeck
  • Chicago, IL
7
Votes |
6
Posts

2nd deal done with a partnership experiment.

Joshua Schindlbeck
  • Chicago, IL
Posted Jul 14 2020, 18:39

Investment Info:

2 unit house converted (1 one-bedroom and 1 two-bedroom) buy, hold, then sold investment in Aurora, IL.

Purchase price: $22,000
Cash invested: $15,000

This is a 2 unit with 1,290 sq ft and was built in 1915.

What made you interested in investing in this type of deal?

After my first deal, I wanted another but did not have enough capital. I am still not ready to step out on this full time so I partnered with a friend, we pooled money together, and worked this deal together.

How did you find this deal and how did you negotiate it?

This was in 2012. I had an agent who is a close friend and a local investor. Very smart man who I am learning from. This was an empty house that needed a lot of work and the seller, who inherited the property, wanted to get rid of it. They were asking $32,000 (I think) for the property but, due to the condition, no bank would provide a loan. Our agent negotiated the sale for $22,000 all cash.

How did you finance this deal?

All cash purchase and most of the rehab was on credit.

How did you add value to the deal?

New roof, furnaces, carpet, paint, appliances, mostly new plumbing, etc...

What was the outcome?

We first fixed up and rented out the one-bedroom unit. We then fixed up the two-bedroom unit. The first tenant was a problem and left just before eviction and trashed the place. Not as much to fix up the second time but rehabed and rented again. Held onto the house for two years and then sold it to the tenants in the two-bedroom unit. We sold it for $58,000 in 2014 and hold a 10-year note.

Lessons learned? Challenges?

1. I said it on my first deal, screening tenants is key. I knew the first tenant would be a problem, however we were barely keeping afloat with finances and needed the renter. It was a gamble since it could have been very expensive is she refused to leave. She left without paying all the rent she owed and did minor damage. It worked out and we made a small (SMALL) profit the first year after paying off all credit purchases.
2. Pay attention to rent increases in the area. I still don't do this as good as I should. 
3. Conduct random inspections to ensure tenants are keeping the property in good condition.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Yes. My agent is a friend and life-long property investor. I have learned a lot from him.

Loading replies...