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Updated almost 3 years ago,
Recent Purchase Success Story- Quick Close
Greetings, my fellow Real Estate Investors! After sharing one of my recent real estate transaction success stories, I have decided to share another similar experience of a successful deal with the BiggerPockets community, in the hopes that you may derive some useful lessons out of it.
My Investment Strategy: As I explained in the previous post, I primarily adopt a Buy-and-Hold strategy, specifically utilizing the BRRRR method. This particular strategy largely influences the assets I pursue and invest in.
This recent purchase was an up-down duplex; the basement unit was completely vacant with unfinished areas, and it required some clean-up and light renovations. This opportunity was brought to my attention by one of the local agents I had been working with for some time. She advised me that although this was a lucrative opportunity, it required immediate action since the seller was in desperate need to sell the property due to financial hardship.
Purchase Price: The property was listed for $112,000, and within 4 hours of the property being listed, we reached an agreement for a purchase of $120,000 with a quick close. I was confident that this was a promising purchase since during the two-week closing period I received 3 offers for the property between $160,000 - $170,000 to take over the deal.
Cash Invested: I put forth $24,000 for the down-payment and a further $12,000 for renovations. The upstairs unit was in excellent condition and no action was needed there as such, and the tenant was in good standing even though they were paying a little below the market rent. This tenant continued to stay, and we renovated the basement unit meanwhile. We utilized a portion of the budget in bringing over a cleaning company to remove the belongings and stuff that had been left behind in the unit. We also upgraded the flooring, expanded the bedroom by shifting the bedroom entrance and upgraded the closet too. In addition, we enhanced the kitchen and also upgraded the severely outdated appliances. These renovations took a few weeks to complete and we also brought in contractors to remove a dilapidated garage that was located near the building.
The Outcome: Before we completed all of the above mentioned upgrades, we had already secured an agreement for a tenant in the basement unit. This increased the gross rent to $2,200 per month, with a monthly net profit of $1,200.
As part of our routine procedures in such deals, we paid to have a re-appraisal completed by our bank to ensure they had a clear understanding of the equity we had in this property. Following that, it has been presently re-valued at $260,000, which means we have an equity value of $164,000 in the said property. We have not conducted a refinance at this time; however, we do intend to pull this equity to use as a down payment on a few more rental properties in near future.
Lessons Learned: The most important lesson I gleaned from this deal was the importance of accessible cash to close deals quickly when worthwhile opportunities present themselves. This is certainly something that we still struggle with since we are actively expanding our portfolio and our cash resources are often tied up, but it is something that we are improving at with each successful deal we close.
So, this wraps it up for now. I hope this particular instance from my investment journey can serve as an inspiration and a guide for fellow investors on this platform, and I would welcome and greatly appreciate any feedback or comments. I look forward to mutual learnings and valuable investment advice from my BiggerPockets community.
Happy investing!