Buy and Hold turned 12 Month "Flip"

[Karl McGarvey]

Investment Info:

Condo note investment investment.

Purchase price: $113,500
Cash invested: $25,000
Sale price: $240,000

Bought a beachfront condo with the intent of using is as a STR that we would hold for the next 5-10 years, taking advantage of local tourism in Galveston Texas. Sold the unit 12 months later for over double, and seller financed the deal to the new buyer (15% Down / 30yr Amortized / 6.75% Fixed). To pay off the original loan, we leveraged a local cash source, which we repaid at closing using the buyer's down payment and then both my partner and I gave our LLC personal loans to be able to create streams of income from the LLC.

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

Current appreciation and access to cash allowed us to make a great ROI without having to worry about tenants. This allows us to divert attention to other projects, while still having a stream of completely passive income.

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

Everyone in our LLC has a real estate license.

How did you finance this deal?

Personal Loans to our LLC

How did you add value to the deal?

We added new floors to the unit after purchase to bring it up to market standard for vacation rentals.

What was the outcome?

$127,000 profit in 12 months with the potential for $68,000 in interest payments over the next 5 years, making this sale worth appx $195,000 in ROI.

Lessons learned? Challenges?

Passive income does not always have to come from owning the property.

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

Everyone in our LLC has a real estate license.