My First Rental

[Richard Trayer]

Investment Info:

Townhouse buy & hold investment.

Purchase price: $188,200
Cash invested: $28,700

Tempe Townhouse
1700sf 3/2.5/2 (originally)
Prior owners converted garage for additional 400sf space.

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

Honestly... I wasn't.

I was in the middle of a Large Custom Remodel Project for my mom. It was going a little sideways with the contractor and I was stressed. But, this deal came (Pocket List) through a good contact of mine and I wanted to be sure to perform. This was the early days of Covid-19 and everybody (Investor Buyer(s)) were frozen... so we couldn't wholesale it through the brokerage at first.

I jumped on a grenade and landed in a bed of roses.

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

Through an agent contact of mine. We agreed on a price, but renegotiated a bit due to plumbing concerns.

How did you finance this deal?

I used Hard Money Loan w/ a Construction Escrow. 6 month term (balloon), 10% interest only, 2points origination

How did you add value to the deal?

It was a "Refresh" type job.
I cleaned it up and added some landscape to the small, barren back yard. I updated the two upstairs bathrooms and added new carpeting to the bedrooms. Repainted the entire interior and updated fans and fixtures.

What was the outcome?

I had it turned around and leased in 2 months. Tenant has renewed every year since.
Reimbursed $10k of my out of pocket from the Construction Escrow of HML. Refinanced $200k at <5% and doubled my equity.
Property is now worth $400-$430k

Lessons learned? Challenges?

Sometimes, even when it's scary, you just have to jump.
Managing multiple projects is not all that bad, and can help you diversify