Buy and Hold Long Term rental

[Joe Stout]

Investment Info:

Townhouse buy & hold investment.

Purchase price: $180,000
Cash invested: $51,864 ($37,000 down payment) + Closing costs & pre-paid/escrows

Very well maintained 3 BR 1.5 baths middle unit townhome. Conveniently located near shops, and a number of water front restaurants. Brand new carpet, some updated light and plumbing fixtures. Great size basement with high ceilings. Perfect for entertaining or other endless ideas and possibilities. Completely turnkey, offmarket deal.

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

Investing for cash flow while being affordable and being in a place where I would live. Knew the rent would work because it hit the one percent rule, (Rent was exactly 1% of the purchase price) once I saw that I contacted the seller!

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

Found this deal through a listing on an off-market site. Was able to get in and see the house, letting the seller know I was pre-approved and 100% serious and had an agent and lender ready to go.

How did you finance this deal?

Financed this traditionally with a 20% conventional loan. This was the best choice to me since the 15% DSCR loan's interest rate was too high and I wouldn't qualify since I didn't have year long leases. The 25% down conventional loan offered better cashflow, but a lower cash on cash return. I always look at cash on cash return as my go to metric.

How did you add value to the deal?

This was turnkey. All I had to do was switch the doorknob, pay for photos, and start screening tenants and I was in business. Due to the nice photos that were only $130, was able to charge higher rent.

What was the outcome?

Saw the property in February, Closed in March, Moved-in Tenants April problem free. Seriously the easiest investment I have ever done.

Lessons learned? Challenges?

Lessons learned is to definitely follow the tenant screening processes I have in my google drive. I began the process by winging it as if I hadn't done it before.

Challenges- Was challenging to convince the seller to do seller financing, they wanted a big check and I need to work on my pitch for that.

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

Worked with Martin Willigan, a fantastic agent in Catonsville, MD. He was not only knowledgeable and professional, but moved the paperwork along quickly and smoothly. He was able to provide a fantastic investor savvy lender as well, Bryan Lovern with Cross Country Mortgage. With these two guys, your team will be hard to stop in taking down deals.