Low Priced SFR from Mailer

[Michael Masterson]

Investment Info:

Single-family residence buy & hold investment in Brooklyn.

Purchase price: $65,000
Cash invested: $7,300

SFR with a tenant in place ~30% below market. Purchase price of $65k, appraisal of $96k. ~$3500 in renovations/repairs w/ a conservative 10% CAPEX budget to build reserves up going into 21'

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

This deal was priced attractively as either a flip or a buy & hold. Was not initially interested in SFR but having multiple exit strategies made it a no brainer. Planning to rent out to tenants (that are already in place with a 24 month lease) and then assess at that point.

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

Found this deal with a mailer. Rentable sq. footage was very low so it wouldn't attract a lot of buyers at sub 1000sf. After looking at it, there is opportunity to expand/add a bedroom in the basement along with creating ample parking in the rear.

How did you finance this deal?

Conventional financing.

How did you add value to the deal?

I was willing to take this deal w/ little to no negotiations because I knew the value would be there from a cashflow standpoint or if I needed to flip I could at minimum get out with my head above water.

This was simply overlooked because of the square footage on the county website.

What was the outcome?

Overall this is a cashflow positive property. PITI ~$515 w/ a $950 rent and minimal needed for CAPEX. Pre-negotiated in the lease is that the resident handles grass cutting, water/sewer, and snow removal.

Lessons learned? Challenges?

I think there will be a lesson learned as this is a new neighborhood for me to own long term. I've only ever handled flips here, so it will be interesting to see things pan out with having the residents handle things I normally sub out (ie grass, snow removal, etc)