Renovated Historic Brownstone Townhouse turned Long-Term Rental

[Anthony George Elberti]

Investment Info:

Townhouse buy & hold investment.

Purchase price: $169,999
Cash invested: $25,000

Victorian/Edwardian Brownstone Townhouse in Harrisburg's historic Olde Uptown neighborhood. It was a 5 br, 1 bath nightmare with good bones, that was full on gut and remodel into a beautiful 3 br, 2 bath bachelor pad. Shortly after, I got married and have been successfully renting it out for the past 15 years.

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

I just sold a townhouse in a much higher market outside of Philly, so I figured even though I was buying at the top of the market, it was still a substantial savings from living in Philly. I really wanted to do a full rehab of a Victorian/Edwardian and stay true to the period. I really liked the neighborhood. Had several friends there at the time.

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

Online search, then found a local realtor. I didn't know what I was doing. I didn't negotiate because I didn't know how at the time. All I knew was that I made a nice pot of cash by selling at the top of a high market.

How did you finance this deal?

5% down, primary residence. Got two mortgages.

How did you add value to the deal?

Restored the floors to their original condition. Installed gas water heater, new gas fed HVAC system, ran ductwork for returns to allow for A/C. Replaced the old rubber roof. Added new washer/dryer combo (gas). Sistered up old sagging joists. New electrical panel. Replaced all knob and tube wiring with new wires, added cable and wifi. Remodeled bathroom with new fixtures, PEX tubing and proper venting. Added vinyl clad to windows. Repointed brick. New trim & paint.

What was the outcome?

I purchased right before the housing market collapsed. I installed fixtures and finishes as if I was going to live there full time. But then got married and moved out. Couldn't sell for first few years because I was underwater. But we've been able to successfully rent it out for 15 years, we refi'd twice and now it's actually making money instead of just being a tax deduction. Renter indicated that he wants to live there for another 5-7 years which will completely pay off the remaining mortgage.

Lessons learned? Challenges?

Negotiate! Should have had seller do the financing. Having worked a summer as a contractor's assistant in Harrisburg, I learned a few things about fixing old houses. I was looking forward to the challenge. I should have had a better prioritized plan for remodeling so that I could have been living there sooner while remodeling. I spent a lot of time driving! I definitely should not have become a Direct Buy member. That was a total distraction and ended up being complete waste of money.

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

Eric Hoffer was my realtor. Didn't really build a report with any lenders.