Cash Cow in Cowtown, Pt. 1

[Nicholas Baker Wood]

Investment Info:

Single-family residence buy & hold investment in Conway.

Purchase price: $59,500

This home was purchased in a bundle with another home for $119,500 total. We put about $20,000 of the bank's money into this property using a construction loan, and have made some out of pocket repairs after the initial capital expenditures. This large 3/2 home with a large bonus room is nearly 100 years old, but it is still in good condition, and has been updated with new HVAC, insulation, electrical (installed by previous owner), flooring and paint, windows, and kitchen backsplash + counters.

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

My wife and I were interested in purchasing strictly investments properties after owning one successfully for about 8 months leading up to this. At the time, many banks were requiring 0% down on construction loans, and financing the entire cost of the remodel. We were able to buy these two homes, and remodel them (mostly) within budget, only coming out of pocket slightly.

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

Zach Saxion, now my business partner, found these homes off-market for us.

How did you finance this deal?

Construction loan

How did you add value to the deal?

New floors, new windows, exterior window trim, fascia, soffit and porch rail paint, new counter tops, kitchen backsplash, new light fixtures, interior paint, new HVAC system, new attic insulation, new water heater, washer and dryer, and finished out the lower bonus room with sheetrock and texture. New roof added in 2021.

What was the outcome?

The home now rents for $1,050/mo, and could likely get $1,150/mo in today's rental market. The location isn't amazing; however, the lot is large, and if we hold on to the property long enough, we could eventually build 2-3 duplexes on the lot. It's near downtown Conway, so the area has potential to get better in the near future.

Lessons learned? Challenges?

Our contractor was lazy and asked for too much money up front. He didn't do a good job on some key areas, and was not timely in getting work done. While we thankfully were able to get him to do the job right, it ended up costing us more money and sanity than it felt was warranted at the time.

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

Zach Saxion was our agent, Matt Carter with First Service Bank, Greenbrier facilitated the loan, and Beau Jones assisted with insuring the property.