Spokane house increases in equity AND cash flow increases, too

[Clarissa Holtz]

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $130,000
Cash invested: $30,000

We bought the house as a single-family dwelling, lived in it for 6 months. Then moved out (and across the world). We rented it for $1000/mo those first 3 years. We returned in 2018 for 1 year, remodeled the basement to turn it into a studio, then moved out and across the world again. The cost of rent in Spokane has gone up significantly in the past few years, and we are now able to rent out the 3 bedroom for $1200, and the studio for $500. The house is now estimated to be valued at $300,000.

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

Initially we wanted to just own a home in the US. We are US citizens but live in Kenya 90% of the time. We wanted a place to live for 6 months when we came back to the US every 2-3 years. As we watched the house appreciate quickly in value we have realized that real estate can be a really wise investment, if we take the time to learn the ropes and mitigate risks.

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

We went though a local real estate agent. It was for sale by owner, and our agent helped us to negotiate.

How did you finance this deal?

We had $30,000 to put down from savings and a gift from a family member. The remainder we financed through a basic loan.

How did you add value to the deal?

By turning the unfinished basement into a studio, we have significantly increased our monthly cash flow.

Lessons learned? Challenges?

We have learned that if a house is purchased in an area where home values go up, that rental rates will also go up, and thus our house increased in equity AND monthly cash flow.