First investment property now producing $3k in passive income (NOT AirBnB or STR)

[Fernando Corona]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $300,000
Cash invested: $65,000

Used a 15% conventional investor loan and turned a SFH (single family home) into an 8bedroom/2bath rent-by-the-room model to cash flow $3k NET per month.

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

The floor plan was perfect to add additional rooms to the bottom without adding sqft and the home was priced as if it only had 1000sqft where in reality with the bottom basement, it had nearly 2000sqft. Maximize the real estate of the real estate.

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

Spent 9 months with my wife first looking for properties out of state and worked with an awesome Realtor, Anthony Fontana, out of Atlanta, GA. We put offers on multiple properties and even got into escrow but pulled out because we wanted a certain $$ for renovations. We literally only had $60k in savings to our name. and we needed that money for the downpayment, closing costs, and rehab.

How did you finance this deal?

We used a 15% conventional investor loan using my wife's teacher income to qualify. We then used 0% credit cards and liquidated the cards to cover about $15k of the rehab costs knowing we'd be able to pay off the credit card by the end of the 12month period.

How did you add value to the deal?

We turned the property from a 4bed/2bath into an 8bed/2bath to maximize the real estate and the potential income when renting by the room

What was the outcome?

We've been super consistent with having renters for 8-10months average stay and gratefully cash flow $3k/month to help us build our next egg for our other investment properties that we bought.

Lessons learned? Challenges?

Lessons learned are that no one else is responsible for our success or mistakes. It is all experience when something goes wrong and no one's fault. In our first month of launch, we had the bottom floor flood because of plumbing issues that cost us $1000 out the gate. I wanted to be upset at the contractors and at our agent - but ultimately it was because we lacked experience to actually hire the right people to get the job done. No pointing fingers, lets get it fixed and learn.

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

Yes, I worked with great contractors and an awesome agent who's now helped my network get into 7 deals, 4 of which were ours. Anthony Fontana is the realtor out of Atlanta, GA.

[Chris Evans]

Congratulations on your first deal! I'm very interested in learning more about this style of investing but have stayed away because of the permitting requirements. Would you please answer some questions for me?

1. How was the Special Permitting for operating a rooming house? 

2. What is the ballpark cost for the insurance policy and what liability limits did you use?

3. How do you handle the parking situation? Did you expand the drive? The photo doesn't show. 

4. How fast is Atlanta's permitting right now? I've heard horror stories about the turnaround.