Our 1st Rental Property Deal
Investment Info:
Single-family residence buy & hold investment in Middle River.
Purchase price: $80,000
Cash invested: $30,000
Single family 2 bedroom 1 bath that we renovated into a 4 bedroom 2 bath.
What made you interested in investing in this type of deal?
The purchase price was great, the cost of renovation (with us doing the work ourselves) was low and the ARV was $240,000. There was just too much money available in the deal to walk away from.
How did you find this deal and how did you negotiate it?
A co-worker at my W-2 job told me about a friend that was looking to sell their parents home after they had passed away. I went and looked at the property, the seller wanted $80k and I was happy to offer that. We signed a 1 page purchase contract, and I got my Aunt who is a settlement officer to handle everything so there were no Realtors or commissions involved.
How did you finance this deal?
Private money loan at 8% for the purchase money and 4% for the rehab costs.
How did you add value to the deal?
We gutted majority of the home and were able to come up with a layout that added 2 bedrooms and an additional bathroom to the existing structure of the home.
What was the outcome?
We are renting the property for $1,800 a month and the appraisal for the refi came in at $240,000. We cash out refi'ed for 75% of the ARV.
Lessons learned? Challenges?
This was our first property, so I learned the process of buying, renovating and renting all in one property. A good friend of mine helped with the rehab and taught me a lot about construction.
