First Investment Property!
Investment Info:
Single-family residence buy & hold investment in Summerville.
Purchase price: $144,000
Cash invested: $14,400
Cash Flowing town home in Summerville, SC.
What made you interested in investing in this type of deal?
After listening to the bigger pockets podcast and reading David Greene’s Long Distance Real Estate Investing Book, I became fascinated by the thought of financial independence through real estate investing. From the bigger pockets podcasts, I realized the most important thing for me to do was to get in the game. I know that the first deal doesn’t make you rich, but the things I learned throughout the process of purchasing this first home would help me with my future investments.
How did you find this deal and how did you negotiate it?
I knew that the Charleston market is booming, and more people are moving to the city each year. This has raised housing prices and rents in the city to rise, making the surrounding areas intriguing to renters. I saw that Summerville was an up and coming area just outside the city with easy access to a highway that led directly to downtown. I started researching the Summerville area and landed on this property.
How did you finance this deal?
I ended up putting 10% down (I went 50/50 with a friend from college) and financed the remaining 90% through a bank.
How did you add value to the deal?
There were a couple townhomes that were previously sold for $155,000, but were newly renovated. This townhome needed some work (new paint, laminate floors, etc.), and the sellers were an older couple that wanted to get the property off their hands. I offered $142,000 for the property as is. This turned into a few counter offers but was finally settled at $144,000. The repairs costed roughly $3,500 to get the unit looking like the units that were sold at $155,000. This gave me added equity.
What was the outcome?
The friend that I went 50/50 with on the property is currently living in the property until all renovations are complete. When this is completed, we will be able to rent the property out for $1200-$1300, which is expected to rise as more people seek to rent just outside the city. Our overall monthly payment is roughly $930 a month and will drop to just under $900 when the PMI is dropped. This will be a cash flow of $300-$400 per month.
Lessons learned? Challenges?
I learned about all the documentation that is required for purchasing a home (Its a lot!) Purchasing this property really helped me understand the process of buying and selling real estate which encouraged me to go ahead and get my real estate license.
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
I worked with a great real estate agent who was very helpful in sending pictures of the properties and going into detail about all the minor repairs that were needed. I was hesitant to buy my first ever property without even seeing it, but knew my numbers made sense and ensured she knew exactly what I was looking for so that when I took the trip down to see the property at closing, I would not be disappointed.