Adding value: 1/1 to 2/2 on a small sfh

[Rayce Barnes]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $42,000
Cash invested: $35,000
Sale price: $185,000

Single level, about 900 sqft. Super cute little house with a carriage house garage in the back. This was my second deal and I lost all my employees on this house. But I finished it myself and it came out great.

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

Another cheap house that needed a full renovation. Better area than the first home. Nothing could have been as bad as my first deal. Now I knew “everything”. What could go wrong.

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

I hired a real estate agent. I don’t remember if we did much negotiation. Pretty much paid asking I believe.

How did you finance this deal?

Cash

How did you add value to the deal?

Full renovation. Added a bathroom where the laundry room was and a closet in the back room. This took it from a 1 bedroom 1 bathroom to a 2/2.

What was the outcome?

Rented for $950/month for a few years and ended up selling it for about $185,000 in the beginning of 2021.

I was actually forced to sell due to covid restrictions. Tenant hadn't paid rent for 10 months. Only legal way to evict was to move into it or sell(city and state covid laws). I felt like I had no choice but to sell to get him out. Probably could have quit claimed into a different LLC owned by my wife…..?

Lessons learned? Challenges?

Hire subs. At this point I was still trying to hire employees and show them how to do things by watching YouTube videos on renovations. I still had one employee that said he knew how to do things but he had a very hard time completing a task.

Vetting and hiring subs that specialize in one area is where I landed once I got into this deal.

This gave me the confidence to keep moving forward.

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

Yes, Tom Clark in spokane Washington. He did a great job pricing it in a wild market and helped me reason through several unique offers.

[Suzanne Johnston]

I did my first 1031 this year, but what I was able to do was to find a deal I wanted that was off market. Sell my property off market. Then purchase the deal I found and another property in a neighboring state. But I think if I hadn't been looking for deals that weren't on the MLS I would have had a hard time.