My first investment

[Michael McLachlan]

Investment Info:

Townhouse buy & hold investment.

Purchase price: $705,000
Cash invested: $558,000

1031 Exchange

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

I sold my rental property in San Diego. I purchased it in 2001 and was my primary residence until 2008 when I moved to South Carolina.

In late 2019, I had enough of California taxes and politics so decided to sell. Price appreciation was very good but before I could get it ready for market, a COVID eviction moratorium was put in place so I hung onto it until the fall of 2022.

By that time, the market began to cool and interest rates were on the rise but I did sell the San Diego property.

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

I don’t know that this is the sort of “deal” one finds on this forum. First, I was doing a 1031 exchange, and as you know, I had 45 days to find an like-kind property.

I used a realtor in Charleston to help me find the place on Seabrook Island. The realtor was unfamiliar with 1031 but as we both understood things, we needed to replace the relinquished property with something of comparable value. I had an outstanding loan so that factored into the deal

How did you finance this deal?

I used the proceeds from the sale of the San Diego property plus took out a loan in compliance withe 1031 exchange rules

What was the outcome?

I learned I know nothing about being a real estate investor or evaluating deals. I became an accidental landlord in the first place and had a narrow window to find a replacement property.

Lessons learned? Challenges?

I was not interested in renting my home to a long-term tenant. Even with a property manager, it was difficult to really keep tabs on what was going on with the SD home when I lived in SC.

I decided that STR was the way to go. With the turnover, I could easily keep up with the property condition and even though it's 4 hours away, it's close that I can get to it when I want.

I’m here to learn and avoid the mistakes I made with my Seabrook Island purchase.