Lucky Home Run, First Deal

[Chirag Parikh]

Investment Info:

Condo buy & hold investment.

Purchase price: $45,000
Cash invested: $45,000

Property bought with savings in 2011 via Auction.com.
Lived and renovated myself for one year.
Rented the following year and has been renting since.
Excellent location, excellent net cash flow, excellent appreciation so far.

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

I was just starting out at the time looking for a place to live, but kept in mind the goal was to buy and hold for long term rentals.

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

Auction.com, property was a short sale at the time while the market was hurting. I won the first auction, they said no because my winning bid was too low. I won the second auction at a lower price, and they realized nobody else was going to buy it, so I got it for that lower price.

How did you finance this deal?

Pure cash savings (2-3 years of it). I lived at home prior to this to put this money away.

How did you add value to the deal?

Rehabbed the place myself (Installed tile floor in bathrooms and very large kitchen, upgraded appliances which were likely from the 1980s, patched/sanded/painted the walls, installed new light fixtures and cover plates). Last year I had new carpet installed, wood floor finished, fixed broken doors, and the entire place received a brand new coat of paint.

What was the outcome?

Excellent cash flowing long term rental property, appreciating significantly over time as area has improved (current ARV $110K), rents have also increased dramatically (currently $1525 monthly).

Lessons learned? Challenges?

Rehabbing yourself is a lot of work and a very large timesink. Great for starting out when you have the time available, not a great long term plan if you're trying to build a business out of this.
Quality tenants require thorough upfront work to research them. I have consistently done a lot of upfront research before putting tenants in my unit and have never had a problem with any.
Local team of contractors is important. I now live across the country, so to have a team in place to handle local problems is a must.