First time with investment property! Saw opportunity and jumped

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First time with investment property! Saw opportunity and jumped

Carter Owen
Rental Property Investor · Charlotte, NC · Member since 2018 · 4 posts · 1 vote

Investment Info:

Single-family residence buy & hold investment in Charlotte.

Purchase price: $40,000
Cash invested: $1,500

Got opportunity to purchase family property well below market value. In the process of gutting and rehabbing with plans for short term rental (airBnB and travel nurses). Holding until the area values increase. Also have ties to the neighborhood and I know most of the owners and intend on purchasing around half of the neighborhood properties from them eventually.

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

I have always enjoyed renovation and it is inline with my engineering and building background and my goal is to create passive income so I can work less hours. This opportunity presented itself when my ailing grandfather decided to sell his home to me for cheap. I intend to use it as my entry into real estate investing.

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

Family purchase

How did you finance this deal?

Conventional loan. Started off as a reno-loan but my grandfather passed in the middle of the long process and we switched to conventional just to speed the process up.

How did you add value to the deal?

I am currently doing all renovations myself. Goal with that is that I get as much hands on experience as possible even if it costs extra due to how long it will take me doing it this way. This is aimed to be my "education" so leaving money on the table in trade for knowledge is just fine with me!

What was the outcome?

Still rehabbing

Lessons learned? Challenges?

Renovation loans are amazing but are very difficult to get contractors to be on board and just took an immense amount of time. But I may try again on the next deal but have a contractor on board PRIOR to applying for the loan. Also am very interested in private money for down payments and reno costs/

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  • Greg GaudetPro Member
    Investor · Pukalani, HI · Member since 2017 · 414 posts · 291 votes
    7y

    Nice work! You must be stoked to have your first deal, you're ahead of most people because most people never pull the trigger. 

    Personally I would make one suggestion: to sub the work out. I know you want to learn it, and I did at first too, but I realized that doing the rehab is not worth my time. I can pay someone to do it quicker, cheaper, and better than I can. 

    Quick story - I had a buddy that bought a 1/1 condo, he closed in April and did the rehab himself. I bought a 1/1 in the same condition, in the exact same building, that I put under contract a month after he closed. I closed in June, did the rehab in 10 days (and only spent $2,200 with a combo of luck and lots of networking, and pitching in a few hours myself after work also). My tenant moved in 12 days after closing, at which point my friend's identical unit had been vacant for 4 months. By mid July my friend finally listened to my suggestion and hired the same guy I used and for $800 his unit was finished 1 week later (although I do have to note that because this guy was a $25/hour worker in a $50/hour market he did require some managing and babysitting - but he did good work and I'd rather manage the crew than be the crew. 

    These condos cash flow about $500/month, so my friend lost out of $1,500 in cash flow, and paid $3,000 in carrying costs (HOA fees, PITI, etc.); so he paid $4,500 to save $2,000-3,000.

    Now I don't recommend just hiring someone that will work for half of the market rate - I only did this because I had the chance to see this guy work on other jobs and I knew he did solid work, I just had to stay on top of him to get him to show up (which I was willing to do for a 50% discount). 

    Anyway, the point is that most of the time, paying more to have someone else do the work for you will pay off in the end. 

    Hope this is helpful, I'm not an expert, just a few deals ahead of you. I'd love to see some before and after pics.

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  • Carter Owen
    OP
    Rental Property Investor · Charlotte, NC · Member since 2018 · 4 posts · 1 vote
    7y

    Excellent advice, but unfortunatly due to some unforseen cricumstances, we don't have enough cash to sub out at this time. I don't wish to be in a partnership at this time with a rental. But I have my eye on several properties for flipping, I am hoping for some hard money or partnership on the flip ventures. And truth is, I enjoy working on houses and learning new stuff. But I certainly have no plans to repeat this same method again unless I am bored and have some extra time! 

    Ideally I plan on building a rental portfolio of mostly short term/airBnB properties but long term rentals if it is more adventageous for the moment. All the while utilizing external capital for the flipping side of the business. 2019 I would like to have two rental properties and flip at least 1 if not 2 additional properties. The neighborhood I purchased the current property has many currently rented properties and elderly owners. I know the owners of 6 of the rental properties and I believe i can persuade them to sell to me below market value. That is my angle and "unair advantage"!

    To achieve this, I will need a source for capital and a trustworthy GC in my area. I hope to find these contacts via bigger pockets and make 2019 my first year as a real estate investor!

    Thanks for the help guys!

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