Buying My Childhood Home

[Dustin Sanchez]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $150,000
Cash invested: $203,700

Numbers will be updated once the cash-out refinance goes through in a few days.
My 3rd BRRR property. Purchased this home from my parents (it was the house I grew up in).
$53,700 Rehab took about 30 days. Tenants are in place.

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

I wanted to get to 10 rental properties asap. My parents wanted to sell their home so they could move into a retirement community. Nobody else in the family had any money.

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

My parents sold me their home. I had to ask all of my siblings if they had any interest in purchasing it. Nobody did. I made my parents an offer, they accepted it.

How did you finance this deal?

I purchased it with my own cash. Rehabbed it with my own cash. I'm cash-out refinancing into a 75% ARV Loan (30 year fixed 4.5%). Cash-out refinance should be complete 1st week in Feb 2022.

How did you add value to the deal?

$53,700 complete rehab that included, among other things, a surprise $7,000 foundation repair, new roof, new AC, new water heater, whole house new plumbing, remodeled kitchen and new appliances, remodeled bathrooms, new paint inside and outside, new floors, new landscaping...

What was the outcome?

House appraised at $220,100 after rehab. I'll leave about $47,000 in the deal after cash-out refinance. It will cash flow about $320/mo in year one, for about an 8% cash on cash return, and my R.O.I. is about 17%.

Lessons learned? Challenges?

Leave some margin in your estimates for surprises like foundation repairs (or get an inspection before you make an offer).
Be careful that you don't end up paying too much when purchasing from family. You're just not going to bargain too hard when you're buying from your parents.

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

Julia Jordan at Keller Williams was the agent on this deal.
Gateway Mortgage for the cash-out refinance.
Phillip Conchola at PR Electrical Services was the main contractor on the rehab.