Single Family Rental - $1,300/mo Cash Flow!!!

[Mike Lawrence]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $740,000
Cash invested: $260,000

Single Family Rental property in HOT Austin neighborhood minutes from The Domain

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

We have another rental property in the area and it has done very well over the years. The Austin market is super hot right now and we believe the area around The Domain will continue to appreciate massively.

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

We found the deal through online listing and hired Taylor Drolette from Sprout Realty to negotiate the deal. There were multiple offers and Taylor helped us win the property!

How did you finance this deal?

We used Park Place Finance to secure a 30 year note, but we were able to get the first 5 years interest only, resulting in even better cashflow. We put 35% down, so we have plenty of equity in the deal and feel confident it will appreciate massively, so the interest-only option made perfect sense for us.

How did you add value to the deal?

The upside on this deal is the cashflow and appreciation. It was renovated beautifully, so there was nothing to add in terms of rehab. Where we added value is being bold enough to ask for $3,500 per month in rent. That price is way above comps in the area, but we felt given the state of the market (HOT) and the quality of the home, we could pull that rent. Our boldness paid off! We got multiple offers and ended up renting in for $3,600.

What was the outcome?

$1,300/mo in CASHFLOW

Lessons learned? Challenges?

Many investors would shun paying 740K for a rental property. Even in the super hot Austin market, most investors are looking for properties in the 300-400K range. We did not intend on going THAT high, but this house is a GEM, and we believe strongly in the market surrounding The Domain. Going against conventional wisdom paid off, and now we have a $1,300/mo cashflow property that will likely be worth 1MM+ in the next 3-5 years.

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

Taylor Drolette with Sprout Realty did a fantastic job helping us win the bidding war on this house and also finding great tenants at a fantastic rental price.