Third condo purchase

[Zane Cress]

Investment Info:

Condo buy & hold investment.

Purchase price: $140,000
Cash invested: $40,000

I got caught in the Covid price run up strong here. I was attempting to take my profits from one place and acquire two more but the deal I was working fell apart last minute. I had sourced an off market deal from an older out of state landlord, but the numbers weren't working due to absurdly low rents and a long running lease. Had to put all of my 1031 money into one unit in the last days of my 1031 time frame, but it gave me good equity and a great rate so the cash flow has been worth it.

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

Complex is great and demand for the area remains strong. Being on the HOA board I have a lot of control over the property.

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

Scoured the tax records to find places that had been bought 10+ years before with addresses outside of the state. Found a lady in Connecticut that owned 2 units and called her up. Offered to buy them and she was interested. Took another 4 months for her to commit but someone talked her into listing them. I was able to secure the contracts but the numbers didn't work on one of the units and she wouldn't budge on the price. I took one and left the other on the market.

How did you finance this deal?

1031 exchange and conventional loan.

How did you add value to the deal?

New floors, installed a washer/dryer unit and new stove. Negotiated the current tenant, who only used the place on football weekends herself, to leave all of her furniture in exchange for skipping the last 3 months of her rent. Got a great set of living room furniture, 2 beds, 2 dressers, kitchen table and she was out in 2 months.

What was the outcome?

Excellent cash flow as a midterm rental. Just secured an 18 month lease for a midterm rental price that will cash flow great until 2024.

Lessons learned? Challenges?

Washer/dryer install used to be fairly affordable, not anymore. Cost of stackable units skyrocketed and plumbers are getting premium prices for jobs at the moment. Did not factor in the full cost to my budget.