VA Loan SFH rental in Columbus, GA

[Graham Young]

Investment Info:

Single-family residence buy & hold investment in Pontotoc.

Purchase price: $143,000
Cash invested: $22,000

Bought SFH with VA loan in need of minor repairs. Due diligence indicated it should rent well. Added value with a quick kitchen remodel, a utility shed, and refreshed the house's paint. Lived in it for a little over a year to fulfill the occupancy requirements of the VA loan, then moved out and rented. This was my first RE investment.

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

When the interest rates were so low, I saw the opportunity to buy a good buy-and-hold without much expertise. I knew that rates were at a historically low level and if the U.S. economy wasn't going to collapse, that a loan in 2020 would be more proportionally valuable as time went on and rates bounced back.

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

Searched Zillow and Redfin for about 4 months looking for property that fit the criteria, and also worked with a realtor. The realtor found this deal and helped us negotiate the price down 3.5%.

How did you finance this deal?

VA Loan using myself and my wife as co-borrowers, with about 14% down.

How did you add value to the deal?

Kitchen needed remodel, and the back yard shed was rotting and needed to be replaced. Partial contractor, partial DIY kitchen remodel to add cabinets, shelves, backsplash, and paint, and then DIY shed replacement and house paint. Spent all in around $6k on these remodels.

What was the outcome?

Shed and kitchen improvements allowed my property manager to rent the property for $150 higher than I anticipated. Simple cash repayment horizon is 3.3 years, and attracting better quality tenants at the higher price point.

Lessons learned? Challenges?

Lessons learned: At today's interest rates, this exact same house would be around cashflow neutral. To make a similar deal work for next time, I will need to negotiate a better purchase price and more value-add. My due diligence on the house was spot on.

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

I wholeheartedly recommend Owen from IGH Properties as a property manager. His expertise has allowed me to rent this property for higher than anticipated originally. Also the realtor I used was Paige Bunnell from the PCS Pro Team and she was very helpful in buying my first property.