Updated almost 2 years ago on . Most recent reply
1st Investment - 2020 Purchase
Investment Info:
Single-family residence buy & hold investment.
Purchase price: $80,000
Cash invested: $4,000
This was the first property my wife and I purchased. We previously rented this property for 3 years before buying it. We used it as our primary residence for 12 months and then moved to a new home. We pulled a heloc on this property for $10,000 this allowed us to do some rehab on the property and rent it out quickly for $1200 a month. 6 months later we refinance this property and pulled approx $18,000 of equity to purchase our next property.
What made you interested in investing in this type of deal?
Single family home. When my wife and I were renting this house our payment was $850 a month. When we purchased the property our payment went down to $625 a month. This inclined me to make it a rental. We also new it would be to small for our growing family.
How did you find this deal and how did you negotiate it?
I previously listed this property as an agent 3 years before we bought it. It sat on the market and the seller chose to remove from the market instead of lowering the price. At that time my wife and I were looking for a rental. So we rented this property for 3 years. Over that time the homeowner replaced the furnace and painted the exterior of the house. We made an offer at $70,000 and in the end The seller accepted $80,000 and paid for $5k of our cc making our cash investment about $4k
How did you finance this deal?
FHA mortgage with 3.5% down
How did you add value to the deal?
We pulled a heloc of $10,000 to put new kitchen cabinets and granite counter tops in the property. We also painted everywall and piece of trim. We also rehabbed the laundry room that was in the garage to be an actual laundry room and added a pantry.
What was the outcome?
We were able to get an evaluation at $137,000 24 months after we purchased it. This allowed us to refinance at $104,000 putting approx $14,000 in our pocket.
Lessons learned? Challenges?
We maxed out the refinance amount and had negative cashflow for about a year untill we could raise the rent. We were more focused on putting money in our pocket to buy the next deal rather than focusing on keeping the cashflow.
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
I am a realtor and my brother is a contractor that does the rehabs on my properties
