First Deal - SD Condo in 2014

[Tommy Rollow]

Investment Info:

Condo buy & hold investment.

Purchase price: $281,500
Sale price: $620,000

Originally bought and house hacked while I was stationed in SD with the Navy. Converted to full rental in 11/2016. Renovated in 08/2021. Sold shortly after the Reno and separating from Active Duty in 2021 in order to take advantage of the extension to the capital gains exclusion for military members.

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

Sick of paying rent and wanted to be able to do little projects here and there to improve the property. Also my friend from college was moving to SD and wanted to be my roommate/tenant.

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

Through an agent. Offered $1,500 over asking to outbid two others.

How did you finance this deal?

VA loan.

How did you add value to the deal?

My whole paychecks while on deployment went towards the loan principle and I refinanced 2 years later for a 15 year loan (orig. 30yr) with the same monthly payment. (I would have invested that elsewhere in hindsight, but just glad I didn’t spend it on stupid stuff). A few minor cosmetic improvements while I lived there and afterwards to justify rent increases. $40,000 renovation in 2021 added ~$80,000 to the sale price.

What was the outcome?

Sold in December 2021. Proceeds went into the market…😔. Waiting for the next great opportunity to come around!

Lessons learned? Challenges?

Landlord/tenant relationship with a friend can be tricky to navigate but it was a balance of setting expectations while not being the evil landlord. Treating my property with TLC set the example to be followed. Professional photos are worth it. Remote self-management is not easy but can be done and was worth the savings to me. Tenant screening/rent collection make it much easier and more likely to be successful.

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

Navy Federal CU loans were easy and had good rates at the time. I have since found better rates. Rancho Photos was great for quality photos and a quick turnaround.