First real estate investment

[Robert Coldwater]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $220,000
Cash invested: $220,000

Beautiful well-maintained single-family home with three good size bedrooms and 1.75 baths, just under 1200 ft.²
Beautiful natural woodwork, coved ceilings, plaster and lath. Kitchen and bathroom could use updating.
Top quality tenants paying 10% below market rate two reduce turnover.

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

The primary purpose of this investment was to produce $770 a month minimum in cash flow to fund my child’s education.

This property is currently cash flowing $970 month after covering all expenses and putting aside $440 a month towards maintenance.

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

I found this deal on Zillow, with the support of a rockstar broker/agent/investor/property manager/mentor who has nearly 30 years of experience investing and 167 doors in the local area.
Offered 220 cash. Other offers of 240 but mine was no contingencies except inspection and two weeks to closing.

How did you finance this deal?

I paid cash. My wife and I are in the fortunate position of being entirely debt-free. However, our only income prior to this investment was my monthly disability income.

How did you add value to the deal?

at this point I have added a little value to the deal. I added value by purchasing $20,000 below asking price, adding curb appeal by removing dead trees and debris, and putting in flowerbeds, updating the electrical system, adding a garden shed, replacing gutters. Intend to update the kitchen with new countertops, cabinets and backsplash, as well as update the bathrooms with tile tubs around new tub, new sinks, and vanities next summer.

What was the outcome?

Cash flow exceeds what I intended, and there is plenty of room to increase the income by upgrading the bathrooms and kitchen.

Additionally, it is my intention to use some sort of financing vehicle such as a home equity loan or home equity line of credit to withdraw equity from the property and use it to invest in an additional property

My wife also has a duplex with over $500,000 worth of equity. It is our intention to combine our equity and purchase a quadruplex or similar.

Lessons learned? Challenges?

May have been a better idea to purchase a less expensive property that was distressed and increase equity by doing it as brrrr.

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

Yes, described in an answer above.