Berm House.. Lots of Bang for the Buck

[Brienna Roberts]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $119,000
Cash invested: $45,000

This house is super unique.. It is a berm house so it's as if you're living in a walkout basement. The space above is full of potential, but currently just one large open space. It did not have egress windows in the 3/1 when we bought it so it was listed as a studio. a 1100 sq ft studio with a 2 car garage, on 2 acres situated on river front about a mile from town. We renovated (ripped down to the cement block), added egress windows and now rent for 1600/mo.

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

Lots of opportunity to increase value because it could only be considered a studio without egress exit in the bedrooms. The house faces away from the road, so it's very unique but perfect for LTR. It's literally bomb proof. Constructed of cement on the lower half and an amazing opportunity to turn the upstairs into living quarters making it an easy duplex down the road.

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

My husband is always looking for the weird houses that sit on the market. This thing was ugly with old soggy paneling and standing water on the floor (but its all cement)! it was listed for 140 at the time. We offered 105 and got it for 119.

How did you finance this deal?

Portfolio loan. We had a lot of equity in another property so just shifted some of it to this one. Paid for the renovations with cash made off other rental properties.

How did you add value to the deal?

The 'attached' garage did not have access through the house, so we cut a door into the living room to add appropriate access. Added egress windows to all bedrooms, gutted it 100%. New insulation, water proofing, electrical, renovated bathroom, new flooring, drywall and paint.

What was the outcome?

Currently renting at $1600 a month. First two years rented to the same amazing tenants at $1450 until I helped them buy their first home.

Lessons learned? Challenges?

lessons? Look for the ugly houses. Our first tenants actually looked at buying this house before we did but couldn't stand the thought of living in the house and seeing all the work that needed to be done. Its no worth $240-260k