My First Rental that started it all
Investment Info:
Single-family residence buy & hold investment in Lubbock.
Purchase price: $105,000
Cash invested: $35,000
Sale price: $161,000
This was the first rental that started me down the path of building a portfolio of rentals. I used a 1031 tax exchange to move my equity to New Braunfels so I could self manage and increase my cashflow. My main focus on this one was strong cashflow with minimal renovations.
What made you interested in investing in this type of deal?
It was priced well and would cashflow very well.
How did you find this deal and how did you negotiate it?
I found it before it hit the market by riding along with another agent in my office. I only negotiated a little because the home was already under market value and I didn't want to get in my own way when I found a solid deal.
How did you finance this deal?
Conv 30 fixed rate with 30% down. We had to put more down because we didn't have any credit score. I learned from this point on it was going to be important to maintain good credit to be able to be successful in this industry.
How did you add value to the deal?
We had both of the bathrooms renovated. After the first set of clients, we replaced the old carpet with vinyl plank flooring since it was cost-effective and longer-lasting.
What was the outcome?
We were able to cashflow on this rental for several years and allowed it to increase in value with appreciation. I used a 1031 tax exchange to move the equity into two rental homes in the town I currently live and focus on.
Lessons learned? Challenges?
I learned the importance of having a very good property manager if I was not going to be managing it myself. I prefer to self manage my properties and select properties that are within my area of expertise. My property manager did not do a good job of selecting and checking on my last set of tenants and they trashed the place. We had to repaint the whole interior and replace all of the appliances.