A bit more than expected

[Ben Mell]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $107,000 (Band Owned)
Cash invested: $90,000

I purchased a single-family home (one side of a twin) in Bridgeport in 2014 with the intent to live in it, then rent it out when I had saved up enough for a second home. Well, a $65k rehab budget ballooned into a $90-93k "budget" and we ended up staying a little longer than expected.

We finally moved and rented it out just 2 months ago (2020).

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

For my area outside Philadelphia, this town had a great school district with lower home prices when compared with most towns in the area. The location is connected to lots of major highways without being congested or noisy. Rental rates looked like they would make sense for a buy and hold. The property was bank-owned, which made it spooky as a first deal, but it worked out.

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

Just poking around online. The bank wasn't interested in negotiating.

How did you finance this deal?

We used a renovation mortgage.

How did you add value to the deal?

This is my first rental property so I didn't have much value to add beyond funding and managing the project based on what I have learned.

What was the outcome?

New wiring and plumbing, bathrooms, and kitchen were all part of the plan but we also ended up restudding almost the entire thing because it was in such bad shape. A better house in the end but a bit more costly up front.

Lessons learned? Challenges?

Have your contractor itemize as much as possible. I assumed more was included but it ended up being change-ordered in as the project was underway.