Our First Investment Property

[John Doehler]

Investment Info:

Single-family residence buy & hold investment in Pacolet.

Purchase price: $97,001
Cash invested: $172,000

There are two houses (1948 sqft & 1596 sqft), an office (360 sqft), and a shed (192 sqft) on this large property. We split the property into two residences. We plan to add several tiny homes and/or RV Airbnb spots. This project will be in progress for a while...

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

Low purchase price for the amount of land, the state of repair of the largest and smallest houses and the ability to get started on our real estate investing journey.

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

Found it on Zillow; it was bank-owned. It was listed for $99,000 when I first saw it, but the price dropped to $79,000 two days later so I told my wife I had to drive out to see it (36 miles from my house). I put in an offer and a couple days later was told to put in our "highest and best" offer. Using a little psychology, I decided to offer $97,001 (added a dollar, just in case someone else thought to offer the same price) and came out the winner.

How did you finance this deal?

Cash. Financing wasn't an option

How did you add value to the deal?

I did a lot of the gutting work. I ripped-out carpet, walls, etc. and hired a contractor to rehab it. We put in a new water heater, complete HVAC system, including ducts, lights, shower/tubs, flooring, etc. It was like a brand-new house when it was complete.

What was the outcome?

We were all in on that property for $172,000 and it appraised for $260,000. We BRRRR'd it and are using the extra money to BRRRR the other house on the (split) property. We had to put more into this house, but it should also generate an extra $80-100k.

Lessons learned? Challenges?

Don't do anything you don't feel comfortable doing. I fell off a ladder while painting the sides of the 2nd floor deck. The surgery was just under $50k, but my portion was $1,400. I could have paid less than my portion to paint the deck. Also, I'm technically retired (from the military) so I should be relaxing a little more.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

We used the same RE agent to buy our first investment property that we used to purchase our house four months earlier. We used a local contractor who knows just about EVERYONE in the county. He knew a tree guy that removed five trees for $1,250. We had a 340-foot long (by 10 feet wide) concrete driveway poured for $21,000 (including grading, rock base ,etc.). You name it, our contractor knows someone... He's currently finishing-up the house on our second property.