HELOC Purchase then Refi

[Jason Coleman]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $88,000
Cash invested: $88,000

HELOC/Cash purchase then refinance in 6 months after rehab. 30k worth of equity on day 1. The only stipulations is I had to keep tenant in the home for an additional year with reduced rent. 250/month below market rent. Not a bad deal with that much equity. The tricky part is the refinance and renovations. I would like to renovate this property before I refinance but it's difficult with the tenant in place. I'm currently trying to work with the tenant to purchase another property (thru my realtor business) so I can BRRRR this beast. Cashflow will be about 250/month once I refi. It's 650/month now with 800/month rent. Market rent 1050/month

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

Solid equity from day 1. Seller was an agent so there was no BS in this transaction.

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

Direct mail marketing with Robot Ink. 1000 letters per month. I've gained about 70k worth of business and equity on these deals with 8,500 dollars worth of marketing costs.

How did you finance this deal?

HELOC purchase. I will refinance in 6 months so the lender can use appraised value instead of purchase price. You typically have to wait 4-6 months to refinance if you purchased a significantly discounted deal.

How did you add value to the deal?

I will be spending about 15k in order to increase value at least another 25k. Floors, paint, gutters, adding AC. Heat and ductwork present. Just need to add an AC unit. Then I will be able to find a higher caliber of tenant as well. Might add windows but that's another 6k or so.

What was the outcome?

So far so good : )

Lessons learned? Challenges?

Direct mail marketing works!!! Need to find a better system to field calls and set appointments.

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

I am a licensed agent.