My second deal! Another student rental!

[Mario Ciccarelli]

Investment Info:

Townhouse buy & hold investment.

Purchase price: $160,000
Cash invested: $16,045

This was my second deal and I bought it in a partnership. I found the deal, negotiated it, project managed the rehab schedule, and will run it now that it is stabilized. In return, my partner brought the down payment, half of the closing costs, and half of the rehab/holding costs. I paid for the other half of the closing costs and rehab/holding costs. The number under cash invested just reflects my cash invested, in total the partnership invested $72,000. We rehabbed the property ourselves with the help of my dad who is in construction.

My strategy is to rent by room with a specific targeting of college students. I will occasionally rent to young professionals if there's a vacancy to fill, but given the location I am able to get students in most of the time. Renting by room to students provides a cashflow of $640 + the 10% management fee. Since I self manage for now our actual cashflow is $880/month. We split the cash flow and equity 50/50 in this partnership.

This property took a long time to rehab and, as a result, was one of my greatest learning experiences yet. As a result, I went under contract for my third student rental the weekend I finished this rehab (8/07/2022). I look forward to posting my third deal details here soon! With everything I learned, I am confident I can finish this next one much faster.

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

The cashflow possible when renting by room to students is high, and that is what I need for stage one of my FI journey. With the cash flow I can jump into a riskier job, such as being an agent, where I have the opportunity to scale my income and acquire more properties in much less time. I'm not quite there, but I am getting close to jumping to a new career.

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

This was a FSBO that was about to go on market. Originally he wanted $150k, he got ready to list with an agent for $170k after it sat for awhile, but my agent knew the listing agent and I offered $160k as-is before it hit the market. The seller accepted.

How did you finance this deal?

A creative financing strategy with my business partner and friend.

How did you add value to the deal?

This house needed major updating in the kitchen and bath, some plumbing repairs, new appliances, and new paint and carpet. We did all the work ourselves and with my dad, who is in construction and a tile expert.

What was the outcome?

The outcome was an ARV of $190,000 and $600+ cash flow per month.