Planned Buy and Hold turned into a flip due to market!

[Tiffany Drahonovsky]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $47,000
Cash invested: $52,000
Sale price: $66,000

Planned to hold bought with tenant in place, but got upset at tenant damage. Had a friend who was buying in the area and I needed the cash flow. Sold it a week after tenant was out, she's already got it rehabbed and ready to rent at market. I calculated 24% ROI in 14 months on this one!

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

I intended to hold the property, but it had some sinking and I didn't have the rehab budget to get it where it needed to be. The market appreciation and timing just worked out great for me when a friend agent/investor was adding to her portfolio and we have similar buy boxes.

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

Bought it from a local wholesaler, it was posted on Facebook. So much business is done on Facebook!

How did you finance this deal?

I used my own 401K money, withdrawn under COVID rules to pay back over 3 years.

How did you add value to the deal?

Honestly, I didn't do anything other than sit on this one. It got more damaged from tenants who had a violent domestic dispute than from when I purchased it. Timing is how I added value, and I bought it right.

What was the outcome?

24% ROI in 14 months. BOOM

Lessons learned? Challenges?

Know your buy box and be ready with a clean offer when the property that fits it comes up.
Do walk thrus of the property after any police incident.
Get a lease in place asap. I was sloppy on this one. I need better processes for onboarding new properties/tenants into these yet to be written down steps.
I also learned there's very little appetite for refinancing properties under $100K. The low purchase price bit me here, I had to wait 6 months to refi (seasoning).