The Hunter Lake House

[Steven Scheetz]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $290,000
Cash invested: $110,000

First investment property ever. Did everything wrong, but great example of how with a long enough time horizon, real estate is a very forgiving asset class. Bought from seller, after his mother passed away. Was looking for a quick and easy sale. Bought it as a 1-story 1300 sf house and added a 2nd story almost doubling the square footage to about 2400 sf.

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

Huge value-add potential.

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

Word of mouth. The seller was the produce vendor for my mom's restaurant. He said his mom passed away, and he was going to move into her house and sell his. She told him I was looking to purchase, and I could buy it as is, and the rest was history.

How did you finance this deal?

5-year Adjustable Rate Mortgage. Eek! Appraisal came in way higher than purchase price, so didn't need a down payment.

How did you add value to the deal?

Popped the top, adding a second story with two new beds and 1 bath, and a laundry room.

What was the outcome?

Still own it. Did a cashout refinance to fund future flips.

Lessons learned? Challenges?

Too many to count. Great learning experience. Honestly I was underwater for a few years. Almost lost the house at one point, but was able to get a loan modification. Learned a lot about construction. Learned a lot about property management. I'm glad I did it, but wouldn't recommend such a heavy lift on your first investment.