This is the 1st property that I bought, I bought it as my primary residence using a conventional 5% down loan. In 2020 it became my 1st rental property and it had gone up in value so much that the return on equity became too small, so in 2021 I did a cash out refi and pulled $130k out to buy another property.

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

This was the easiest way that I knew of to own real estate. The primary residence conventional 5% down loan requires a relatively small amount of money and is the best available rate.

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

I found it on the MLS they were asking $225k, it was in the market for 30 days so I offered $210k and asked for $5k closing credit they countered and we settled at $222.5k and $5k credit, but then it appraised for $218k, so we renegotiated and closed at $218k and $2.5k closing credit.

How did you finance this deal?

Primary residence conventional 5% down.

How did you add value to the deal?

Added French doors, updated faucet fixtures and a few other plumbing valves and updated some landscaping.

What was the outcome?

I lived in this house for almost 5 years then turned it into a rental that I still own.

Lessons learned? Challenges?

I should have turned it into a rental sooner than I did. I thought I had to afford two houses in order to buy my next, but I could have just put a lease on the house and used 75% of that income to qualify for the next house. I also did a refi in 2019 to get rid of my pmi and reduce the term to 20 year because I thought paying off the house was the goal, but later realized that my return on equity was too small and leverage is a key to RE as long as you have at least a 1.3 DSCR.

Josh Young

[email protected]

802-274-8121

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My 1st house became my rental

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