Buy and hold partnership

[Patrick Rhodes]

Investment Info:

Other buy & hold investment in Tullahoma.

Purchase price: $50,000
Cash invested: $20,000
Sale price: $476,500

Bought the house and two lots for $50,000. The lots will be developed and have 2 homes built. The game plan for the new homes is to sell them. The existing home has a $30,000 owner finance note @3% for 15 years and cashflows 300 per month. Current sale price of the home is $100,000. The land is currently being developed. UPDATE: I partnered with a builder on this project with a 60/40 split. Builder financed and managed the project. I sold the lots to the builder for 25k each. We sold House 1 for 237,500 and House 2 for 239, 900. My portion of the profit was about 16k for each house.

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

The deal came about because it was a package deal and the exit strategy was to build the two houses and sell them.

How did you add value to the deal?

I found the lots, negotiated front end and back end of the deal. I also sold the homes since my partner financed and managed the project.

Lessons learned? Challenges?

The biggest challenge was the builder going way beyond quoted time. We were supposed to finish the deal in September and close in October/November however we didn't close until February.