Cash on Cash Return of 55%

[Allison Adams]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $155,000
Cash invested: $6,500

I bought a SFH to live in. Then converted it into furnished housing for traveling professionals. I net approximately $300 a month (bills vary), and my cash on cash return is 55%.

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

I wanted to provide housing for traveling professionals. Providing furnished housing with paid utilities allows me to charge more rent. Additionally, since turnover is higher than long term tenants I assume more risk, which is also translated into higher rent. Given the location of my market, it was not suitable for Airbnb or vacation rentals. However, the location did make ideal for traveling professionals.

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

This property was located down the road from my duplex. It was previously a fix and flip; I bought it after the flip was completed.

How did you finance this deal?

I financed this deal with my own savings.

How did you add value to the deal?

I added value by providing safe, affordable, and comfortable housing to traveling professionals. Mainly those who work at hospitals.

Lessons learned? Challenges?

I definitely should have hired a real estate photographer for marketing. The first thing my tenant said when walking through the door was, "Oh this is way better than the pictures.". The challenge moving forward will be the management for the property. Since it is a short-term rental, more effort will have to be put into finding tenants. At this time this property is self-managed, but I would prefer to move to a more passive option.