Finding a deal in Ann Arbor that cash flows.

[Sarah Fowler]

Investment Info:

Single-family residence buy & hold investment in Ann Arbor.

Purchase price: $191,000
Cash invested: $50,000

4 bedroom, 1.5 bath (plus an office space). Tons of big windows and natural light. On a quiet street. Large home with Ann Arbor schools but in a different township (lower taxes). Full kitchen and bathroom renovation completed 2021. Home was all freshly painted and much of the trim replaced. New window and partial new roof where there was a leak.

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

For sale by owner. Just enough work needed to get it for a good price but not so much that it would take a long time. Could get it back out there to rent relatively quickly. The owner, a former contractor, also was willing to help with a lot of the labor if I was willing to pay for materials.

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

Home was posted by owner on Facebook. I went to look at the home and we negotiated in person.

How did you finance this deal?

We wrapped the closing costs into the purchase price as a 'gift' from the seller. Had private financing through a family member for down payment and repairs. They will be repaid with a cash out refi after the property has time to season.

How did you add value to the deal?

Gave them extra time to live in the space (cabinets were going to take 8-10 weeks to arrive so we let them live in the space for an extra 4 weeks while they looked for their next space.

What was the outcome?

Got the house for a great deal, got the home ready in time for tenants (minus countertops)-which they knew could be the case, and are cash flowing nicely

Lessons learned? Challenges?

Challenges...as always cash for the deal. Material delays because of COVID backups.
Plan for the worst: the owner, a former contractor, was willing to help with a lot of the labor if I paid for materials. Well, he ended up in a car accident and broke 7 ribs. He was unable to help which meant paying more than budgeted.
I was finishing up two projects around the same time. I learned that it is worth it to take a break on one project to focus on finishing details at one property at a time.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Krista Dragun is a local real estate agent I often work with and highly recommend. She helped with all the paperwork.