My 1st Buy & Hold Investment
Investment Info:
Single-family residence buy & hold investment.
Purchase price: $125,000
Cash invested: $39,500
Sale price: $250,000
This property marked the beginning of my buy and hold investing journey. It was a 5-bedroom, 2-bath single-family home.
The property was purchased with existing tenants. My original plan was to convert the property into a recovery house, combining my passion for real estate with my work in the substance abuse recovery field. However, when COVID disrupted those plans, after renovating, I pivoted and returned the property to a traditional rental instead.
What made you interested in investing in this type of deal?
I was drawn to this deal because I wanted to start building a buy-and-hold portfolio while also pursuing a bigger vision of opening my own recovery house. It gave me the opportunity to combine real estate investing with something I’m personally passionate about: helping people in recovery.
How did you find this deal and how did you negotiate it?
I found this deal through the MLS and worked with my realtor to negotiate the purchase.
How did you finance this deal?
I used traditional bank financing with a conventional loan at approximately 4% interest.
How did you add value to the deal?
I added value by completing a full renovation after the inherited tenants moved out. Improvements included new electrical, plumbing, updated HVAC, new flooring, fresh paint, updated fixtures, and other cosmetic upgrades. These renovations significantly improved both the property's functionality and overall market value.
What was the outcome?
The outcome was a significantly improved property with increased functionality, higher market value, and stronger rental potential. Beyond the financial return, the renovation also had a positive impact on the surrounding neighborhood, as neighbors were very appreciative of the improvements and the overall appearance it brought to the block.
Lessons learned? Challenges?
#1. HGTV lied, lol. #2. As my first renovation project, I ran into several challenges and learned many lessons the hard way. The rehab began right as COVID hit, creating major delays since contractors had to work separately instead of simultaneously. I was also self-funding renovations, which became difficult as costs increased and timelines stretched. I learned quickly that not all contractors are created equal and had to replace contractors mid-project, which added both time and expense.
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
This project taught me a valuable lesson about the importance of working with the right team. While I worked with several professionals during the process, the experience showed me how critical it is to properly vet contractors and build reliable relationships with experienced professionals for future deals. Some of them I would refer depending on the specific project.