2nd Home Beach House - Full Gut remodel turned into a STR

[Jonathan Goldman]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $410,000
Cash invested: $300,000

This was a full gut remodel to the studs! We bought it as a second home and then ended up converting it from a 3/2 to a 5/3.5 and rebuilt the entire first floor. We added all new electrical, plumbing, drywall, two pools, new driveway, new landscaping. EVERYTHING! It was a huge project, but we got it done and we keep it rented as a STR during the spring/summer/early fall months.

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

Low 2.75% rate with 10% down as a second home on the acquisition and HUGE value add possibility.

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

MLS. I saw that the price was going down 40k every 30 days and before they could drop it another $40k I called and worked out a deal.

How did you finance this deal?

10% Down Second home loan at 2.75%

How did you add value to the deal?

Complete rebuild to the studs. Added SF. Updated everything. Added two pools and new decks, siding, windows, roof, solar heating for the pool.

What was the outcome?

We kept it as a STR and it grosses about $100k even while sitting mostly vacant from October to April.

Lessons learned? Challenges?

Hire someone to manage a big project like this. It was challenging because it was 45 min from my house and I was driving down there 3-4 times per week to manage contractors.

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

Yes! A good friend of mine is a sales manager at Caliber Home Loans here in the area. I am a licensed real estate broker, so I ran my own numbers and negotiated the deal.