1st investment property that wasn’t a house hack

[James Leach]

Investment Info:

Condo buy & hold investment.

Purchase price: $213,000
Cash invested: $42,000

This investment property is a 3bd 2ba condo in north Phoenix area. It is a gated community that has 3 pools. I used a loan against my 401k to buy this property as my first rental property that was not a house hack. I remodeled the kitchen and bath and repainted the whole condo. Cost of remodel was approximately $20k as we did most of it ourselves. (Cabinets and countertops were contracted out.) If you count the repayment for the loan, I’m breaking even with cash flow! Considering equity, tax deferment, and cash flow the deal was more than worth it! A cash out refi has allowed us to remodel another rental e have and out a down payment on another house in buckeye to house hack! I’ve added some before and after pics!

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

Looked at many properties in the greater phoenix area and this one has potential. The decision to take out a loan in my 401k came after comparing the ROI over the next 10 years from the 401k to getting an investment property. The difference was immense! Especially if you consider I turned $41k into $217k immediately! Then you add equity and cash flow and tax deferment, the difference over 10 years was roughly 100% increase in the 401k and close to 2000% increase for the investment property!!!

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

I used a local real estate agent and looked at many properties with I’m my price range. Utilizing $30-$45k for a 20% down payment.

How did you finance this deal?

20% down funded through a loan on my 401k!

How did you add value to the deal?

Repainted the whole condo, remodeled the kitchen and bathrooms! New SS appliances throughout.

What was the outcome?

I’ve been able to cash flow about $550/ month for the last year and have done a cash out refi to remodel another property and use as a down payment on another house I plan to house hack! Tenant is moving out and I plan to increase rents around 5%. Great to have an income stream that combats inflation!

Lessons learned? Challenges?

Remodel takes longer than expected. Contractors can be unreliable at times. I didn’t have the greatest experience with my property manager, I’m going to try my hand at self managing. We’ll see how that works out!