Updated over 5 years ago on . Most recent reply
Young Professional's Destination!
Investment Info:
Townhouse buy & hold investment in Provo.
Purchase price: $208,000
Cash invested: $42,000
This was the first property my wife and I built together. We moved in Jan/14 and lived there for about 1.5 years until our next new build was ready. We knew we would rent it out after moving out so we built it with two upstairs masters and a finished basement with a full bathroom so we could offer it to young professionals looking to stay in Provo after college. We furnished the entire unit's common areas. Each tenant is responsible for their bedroom.
What made you interested in investing in this type of deal?
We could get a better rate by moving in. Also, my wife was a young professional who struggled to find something nicer than a college dorm while still living in Provo. We felt that there was an underserved market in the area and we were spot on. We've had zero vacancies in the last five years.
How did you find this deal and how did you negotiate it?
Smaller developer. The area made sense, being close to two major universities and 5 minutes from the main freeway in the Salt Lake market
How did you finance this deal?
Personal savings. 20% down to avoid PMI.
How did you add value to the deal?
All other units were built with 3 bedrooms upstairs: 1 master and 2 small bedrooms. We told the builder if they could instead build 2 masters upstairs since we knew we would be renting to young professionals after we moved. They did it with no extra charge for us. Then we had them finish the basement (which includes a walkout patio) with a full bathroom. It's a 3/3 that we charge individually and earn more rental income than neighboring units renting to a single-family.
Lessons learned? Challenges?
We chose to have hardwood floor throughout the main floor as a personal upgrade choice. However, we later learned that that was one of the top things the demo we rent for looked in a place out of college. Many shared that their college rentals had nasty carpet. I don't blame them :)
