My First Home Rental

[Thomas Henry]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $1,300,000
Cash invested: $500,000
Sale price: $1,300,000

Bought right after the 2017 fires in NoCal with the intention of moving in. Ended up renting the home for 4 years.

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

Intended to sell our then current residence and move to this one. Super high demand for rentals after the fire altered our plans, so we became a landlord.

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

Found it through a Realtor.

How did you finance this deal?

Standard bank financing.

How did you add value to the deal?

We improved the property by resurfacing the decks, adding safety railings, painted the outside, fixed the roof, and added a henhouse.

What was the outcome?

We made a tidy profit by renting it. We lost money on the resale due to sales commissions. Over all it was profitable.

Lessons learned? Challenges?

The first renter paid his rent through his insurance company. The rent was 4 times the standard amounts charged prior to the fire. This was SOP for the area as the insurers paid to put the insureds in a home similar to what they had before. Checks were like clockwork. The second renter was charged the going rate for the area. He was a bit of a scatter brain, but always paid eventually. We knew his reputation going in and added a hefty late fee which he also always paid.

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

Yes, but our agent recently passed away.