Having renters pay off failed business debt.

[Stacey Nelson]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $89,000

2 BR - 1 Bath single family starter home

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

This was our 1st house and we had 4 kids. We bought it, added a bedroom, and made the basement useable for the kids. (but not counted as finished square footage) We moved out 5 years later and used the equity to pay off our failed business debt, so I would not cash flow well for several years. But the renters ended up paying off all of my business debt while we moved into a bigger house.

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

I convinced my dad to hide some of my debt in order to qualify to buy the house. I then made improvements the first year and re-financed to pay my dad back.

How did you finance this deal?

$0 down and paid mortgage insurance

How did you add value to the deal?

We converted the attic into a bedroom and upgraded the curb appeal.

What was the outcome?

17 years later it is paid off, so it is cash-flowing nicely. We are using some of the cash flow to diversify into a ROTH IRA and using the equity to BRRR some more properties.

Lessons learned? Challenges?

We were young and scared, and it was not always easy. I learned I am not a good property manager. The things I did well were STARTING (even when broke and scared) and finding a property manager to do what I was not good at.

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

I did. I do not know if they are part of this community, but I'll put his name out anyway. Look for Jeff Rud in Cambridge, MN. He is with REMAX