Purchased my brother's home when he moved out

[Tim Lucas]

Investment Info:

Single-family residence buy & hold investment in Beavercreek.

Purchase price: $310,000
Cash invested: $80,000

I purchased my brother's home when he was selling. We did not use an agent. He made more money and I was able to acquire for $20k below market.

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

I had wanted to start investing in real estate, but I live in a high-cost area (east of Seattle). This was my chance to acquire a nice SFR which I knew was well-maintained. Additionally, my brother agreed to manage it - icing on the cake!

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

My brother already had an idea of price before it listed. We took what would have been spent in agent commissions and split it. I got the home for $10k below list and he made $10k more from the sale. It was a win-win.

How did you finance this deal?

Conventional 25% down Fannie. Non-arms length was okay with the lender.

How did you add value to the deal?

Most of the value add came from appreciation during the 2020-2021 market. My timing was perfect, purchasing in the summer of 2019.

What was the outcome?

$150k in appreciation in 2 years. COVID was rough, as the tenants had a hard time keeping up with payments. But it all came back in home appreciation.

Lessons learned? Challenges?

Vet your renters. Rent high quality homes to high quality people and you'll save yourself headache and missed payments. Make the home highly sought-after so you can be picky on who you put in there.

Also, consider allowing pets. You'll open up your tenant possibilities by at least 2x, maybe more.

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

We did this completely on our own with no agent or attorney.