Single-family residence buy & hold investment.
Purchase price: $48,500
Cash invested: $40,000
I bought this investment home as a primary house for loan purposes and lived in it while renovating it. I originally bought it for a fix and flip but after studying the rental rates in Waverly I decided to keep it and rent it out.
What made you interested in investing in this type of deal?
I was interested in doing fix and flips which is what originally bought the property for. I changed my mind while renovating it after understanding what my long term goals are.
How did you find this deal and how did you negotiate it?
I was looking for houses on Zillow around all the areas I wanted to live. I was studying what houses were selling for per a square foot and looking for houses that were drastically lower than what I was seeing. I saw this house for sale around $37 per a sqft. I contacted the listing agent and looked at it and a few hours later I put an offer in for 5k under the listing price and no home inspection. They accepted it without a counter offer.
How did you finance this deal?
A primary mortgage loan through a local bank.
How did you add value to the deal?
We completely gutted the house and refinished it. We tore out 3 walls and a ceiling that was the floor for a little attic space on the main level. Upstairs we joined the 2nd and 3rd bedroom into a Master Suite with a walk in closet and a full master bath. We moved the wall back (increasing the bedroom sqft.) in the 1st bedroom and added a closet. We updated all the wiring and added central air to the house as well. We had the exterior resided as well.
What was the outcome?
After 2 years of doing most of the work myself and with some help from my dad I finally moved to another property and got this one rented out in September of 2020. We posted it on a Monday and had a renter agreement signed by that Saturday.
Lessons learned? Challenges?
It was a bigger project than I should have had for my first investment. It was a lot to take on while having a full time job and being recently married. Another challenge I ran into was figuring out what I really wanted to do with the property and my long term goals.
I learned the hard way it is best to take your time and do something the way it is supposed to be done because if you don't more than likely you'll be fixing it later.
Renovating a house while living in it is extra difficult!!
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
Bravo on your lessons learned. It is much more work to do things quickly, with mistakes, and then have to fix it later. This typically takes up time and resources. It's always better (for everyone) to do things well the first time around. Congratulations on your first investment property @Colton Hamilton
The other thing the kind of goes hand in hand with that is that it’s not always best to buy the “cheapest” options for supplies. Thanks! Staying humble and learning is how we keep driving toward!
It's not uncommon to take on a bigger project than anticipated for the first one. Congrats on your first deal!
Yes. Exactly. Excellent example as well @Colton Hamilton
Awesome! Are you planning to do a cash out refinance?
I am up in the air right now. I am floating between doing the cash out of trying to acquire a line of credit on the investment property (if I can find someone to do it).
Makes sense. How did you come up with a rent price? Did you look at similar houses for rent in your area or did you contact property managers?
I looked up other rent prices and compared them to my property. Rent in the area was hard by and there were more apartments than houses but the little houses I did find I compared the interior and location to my place and determined if mine was worth more a month or less. I might have went a little lower than what I could've got but I wanted to get a renter sooner than later.
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