Deal Diary -- Wilmington, NC LTR -- 18% COC -- It can be done!!

[Wes M.]

Really starting to learn the power of real estate with this last deal.

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $372,500
Cash invested: $57,000 (seller paid closing costs at $8500)

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

Ease of LTR compared to last setup of STR and property location.

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

Cold-called homeowner 8 months ago and left a voicemail asking if she needed help managing the property and if she ever wanted to sell to please let me know. No response and then 1.5 months ago she called out of the blue and stated she wanted to sell. I sent an offer at $352,500 -- she countered at $372,500 and I said deal. Following inspection, I was able to negotiate $8,500 in closing costs.

How did you finance this deal?

Conventional financing 85/15 LTV at 4.25%. Really hustled to find this loan product. Cash was running short due to a recent STR acquisition and I did not want to put $85,000 down. PMI is $87 per month.

How did you add value to the deal?

Very little work needed -- minor maintenance items. I had professional photos taken - drone included - to highlight the property and location. I typically wouldn't do that for a LTR, but in this case at the list price point it made sense.

What was the outcome?

Rented for $3,200/month with cashflow of $900. The property purchase was off-market. The value if sold or listed on the MLS is $475,000. I have immediate $100k equity. Essentially, I made a $100k phone call.

Lessons learned? Challenges?

Make phone calls and talk to people. Figure out how to close a deal. I was concerned about cash needed to close at 20% down plus closing costs --  which resulted in several sleepless nights. I was also concerned the rents would not be achievable as I planned to initially list at $2,950 - which is the rental Zestimate and a figure I still thought to be too high. However, on the advice of my mortgage broker, close friend, and fellow investor I decided to list at $3,200. 

Result: I had a lease signed 4 days later and less than 2 weeks after closing.

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

Shaun Utterson of Angel Oak Loans.