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

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.

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

2/1 Townhouse. Property was in good condition. 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. I have other property in neighborhood and area. Hospital, military base, and university are local economic drivers. Property can also be used as cross collateral to buy other property.

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?

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.

How did you add value to the deal?

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.

What was the outcome?

This is a long term buy and hold property.

Lessons learned? Challenges?

Be patient. Wait for better deals with more profit.

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

Vicky Knowles, agent
Mitch Benier, lender
Emma Smith, property manager
Dave Owen, inspector