Cutting my teeth into real estate
Investment Info:
Single-family residence buy & hold investment in Joliet.
Purchase price: $75,000
Cash invested: $40,000
Property was purchased as a short-sale and extensively rehabed prior to renting. Quite the learning experience with this one as the home was built in 1915 and there were multiple generations of poor renovation attempts.
What made you interested in investing in this type of deal?
Wanted to break into the rental market with a property that I could make the numbers work
How did you find this deal and how did you negotiate it?
Through my real estate agent. Was not much room for negotiating as this was a short sale. At the time (2016), properties were still easy to come by. The home was listed for $78,000 and I offered $75,000.
How did you finance this deal?
25% down commercial loan
How did you add value to the deal?
Performed extensive rehab to the home. My wife and I put a lot of sweat equity into the work. Portions were farmed out for the roofing, electrical, basement drainage system, and driveway.
Rehab included: new roof, basement drain tiles/sump pump, bathroom renovation, kitchen renovation, upgraded lighting in kitchen&living room, new smoke detectors connected to power, ran electrical to detached garage, paved driveway, painted throughout, re-finished hardwood floors
What was the outcome?
Added $75,000 in value to the property
Rented the house for $1,600/month
Lessons learned? Challenges?
Lessons Learned:
Don't hesitate to hire for jobs that you're uncomfortable with. Attempting the work and later realizing you need to hire wastes a lot of time and money.
Time - time wasted dragging on a project that is being performed improperly and that the contractor has to undo
Money - money wasted in extending rehab duration. Money wasted in purchasing tooling and material that is unnecessary. Money wasted now paying a contractor extra to correct your work.
