My Second Deal (First Joint Venture)

[Joshua Myer]

Investment Info:

Townhouse buy & hold investment.

Purchase price: $345,000
Cash invested: $18,000

3x2 new-build Townhouse, joint purchase between my significant other and myself. This is our new primary residence while we rent out our individually owned condominiums.

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

With interest rates quickly rising, home developers in our area began adding closing cost and rate reduction incentives on new-builds. We were able to cover all of our closing costs, absorb the purchase of solar panels into the purchase price of the home, and get an extended rate lock with delays in construction.

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

On the MLS, numbers didn't pencil out when first looking in July/August 2022. Once rates began aggressively increasing, price adjustments and incentives made a lot of sense in September 2022. Not much negotiation was done with the large developer. I was able to get them to include purchase of the solar system into the purchase price of the home with a credit covering all closing costs, rate lock extension, and reduction of purchase price.

How did you finance this deal?

My girlfriend (very soon to be fiance) and I used our personal savings to put down a 5% downpayment.

How did you add value to the deal?

Not much was done to add value. We are using a flooring vendor to replace some of the low quality carpet with vinyl flooring in the bedrooms. We are getting a huge discount since we use this vendor on high volume flooring projects at my property management employer. I will also be replacing fixtures myself such as faucets, cabinet pulls, cieling fans, etc. with more high quality finishes in hopes to add some differenciation between other units in the complex, making it slightly more appealing.

What was the outcome?

We now have a newly built Townhome with brand new appliances and low Cap. Ex. costs in the furture to give us stability for the foreseealbe future while we save to get married next year, both grow in our careers, increase rents on our 2 condos that we individually own and save for our next single-family residence and rent of this townhome in the future as well.

Lessons learned? Challenges?

I learned how to work together with my partner and take action during a time of uncertainty. I used my property managment, real estate and finance experience to run numbers to feel confident in the long-term success during a short-term decline. My partner is a 4th year law student with so much knowledge about community property, business ventures and liability. We both used our strengths, planned, compromised and communicated along the way to make sure both individuals needs were met.

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

Worked with a long time friend and excellent investor-friendly agent, Dean Esquibel. He's been absorbing so much BiggerPockets knowledge over the past few years and has a fantastic mentor and broker. Highly recommend using him if you are looking for a home or investment property in Central Valley California. Dean Esquibel, Lic# 02165668, Keller Williams Realty, c: (559) 284-3326