2/1 Townhouse. Not a grand slam but a base hit.

[Jonathan Small]

Investment Info:

Townhouse buy & hold investment.

Purchase price: $72,500
Cash invested: $9,500

Property details: 2/1 Townhouse. Property was in good condition. Hospital, military base, and university are local economic drivers. Property can also be used as cross collateral to buy other property. I have another property in this subdivision. I purchased this property as a long distance investor. I have never been to the property. I am using our property manager, home inspector, realtor, and banker to vet out the opportunity. They provide me with videos and pictures of the property. Property came with a tenant and professional property management in place. Lease was at market rent and renewed in 5 months. Inspection went well. Roof and HWH have 70%+ life. HVAC has 10% life.
Deal finding: Upside opportunity to increase rent over time. I am expecting to increase rent 10% at renewal. Low rental inventory is leading to higher rent increases. This is a long term buy and hold investment. I found this property through one of my realtors that I network with. Property was off market. On a scale of 1-10 with 10 being a grand slam I consider this deal a 2-3.
Number analysis: I will have about 11% equity before the down payment. Taxes and insurance are about 6% of sales price. Area has about a 3.2% vacancy. I am getting a lower property management fee due to the number of unit I own in the area. I was able to negotiate HVAC repairs and a 1yr home warranty paid for by the seller. I was able to negotiate a longer closing time which gave me time to shop the deal to my other partners. I was able to work with my local banker to get the following terms: 4% rate, 12% down, 5yr balloon that automatically renews, 20 yr amortization. I bought this property with a partner using 2 LLCs as a Tenant in Common agreement.

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

I have other property in neighboorhood and area

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

Off market listing from an agent. I negotiated HVAC repairs and home warranty to minimize risk or maintenance.

How did you finance this deal?

Local bank. 15% down