Assisting a client with their needs - Small personal opportunity

[Rick Santasiere]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $190,000
Cash invested: $190,000

I managed this single-family home for one of my clients for a few years. However, when he tried to refinance the property, he discovered that his debt-to-income ratio was out of line. As a result, he approached me with an offer to purchase the home. Despite feeling that we overpaid for the property as an investment, our relationship with the client motivated us to help him achieve his goals.

Fast forward three years, and the home has appreciated in value, while we have continued to hold it as a rental property. Although it is not a significant source of income, the opportunity to assist someone in need and generate some extra revenue for our business has been rewarding.

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

At the time, this was not a particularly advantageous deal for me. However, I had some additional funds available that were not being used, so when my client approached me with an urgent need to sell, I was happy to assist.

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

The price I paid for the home was determined in an interesting way. We calculated the amount that the owner of the property would have netted from a traditional sale, after factoring in all of the typical expenses and closing costs. This amount then served as the basis for our purchase price.

How did you finance this deal?

We paid cash

How did you add value to the deal?

Over the past several years, we have installed a new roof, new C/Air.

What was the outcome?

Over the past several years, we have invested in some significant upgrades to the property. These include the installation of a new roof and new air conditioning system.

Lessons learned? Challenges?

Through this experience, I discovered that I find great satisfaction in creating solutions for others. The potential future rewards of this investment taught me to approach opportunities from multiple perspectives, considering various viewpoints to determine the possibilities. Fortunately, there were no significant challenges that arose during the purchase process.