There's no reason that house should be vacant

[Shuff Mauldin]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $30,000
Cash invested: $35,000
Sale price: $120,000

Good street, good bones, good price, great potential for a number of methods (STR, LTR, Flip, BRRR).

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

This was one of the very first houses I approached after BP Con 2018. It caught my eye because it sat up on a hill, had a nice front porch, and although it was clearly vacant, the yard was meticulously maintained. It had that “someone cares about it, but it’s been forgotten” look. I knew there was potential if I could get it at the right number.

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

It was a house a few blocks from mine and I discovered the owner was someone I knew from a neighboring town. It had been his mother’s house, and he admitted he’d held onto it for sentimental reasons but was ready to let it go. When I asked my usual “what would you be happy to get for it?”, he said $30,000. I brought in my contractor for a walkthrough, and since the bones were solid and the issues were mainly cosmetic, I agreed to his price.

How did you finance this deal?

We used bank financing for the $30,000 purchase and paid for the $35,000 renovation in cash. The local bank was comfortable with no down payment considering the reno we were about to perform.

How did you add value to the deal?

Everything was cosmetic but necessary to modernize the home:
Removed old popcorn ceilings
New paint throughout (inside and out)
Replaced flooring with new laminate
Updated kitchen (new sink, appliances, countertops)
New blinds
General cleanup
Total renovation budget came to about $35,000.

What was the outcome?

All-in basis: ~$65,000
Estimated retail value: ~$110,000
Rented for ~$1,000/month for two years
Tenant eventually purchased at a price we were happy with
Proceeds were rolled into a better property via 1031 exchange

Lessons learned? Challenges?

Water runoff matters. This property sat slightly higher than the neighbor. Even though the neighbor’s complaints weren’t legally valid, dealing with the potential for litigation taught me to always evaluate water flow... so much so, no houses at the bottom of hills for me... no desire to try and defy gravity/ask water to go another direction (you can only ask).
Renovations almost always take longer than expected, even when surprises are minimal. Deals with solid bones /cosmetic-only work = win