Second Investment Purchase - Student Rental (01/2022)

[John Doss]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $117,000
Cash invested: $63,400

This is a 3/1.5 house in the Glenwood neighborhood of Greensboro. When we first saw it, the previous landlord had done a lipstick remodel on it and you could tell they tried to cover up certain issues. For instance putting new LVP over soft, rotten subfloor. However, because of the location and proximity to the university, I felt that it was a good investment.

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

The house is located in an area that is up and coming due to its proximity to the university (UNCG) and I thought it would be a great opportunity to rent to students at my alma mater.

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

I found this deal on the MLS. At the time interest rates were still in the 3-4% range. We were able to offer about $7,000 over listing price without it really affecting our monthly mortgage payment. We also put up a good amount of due diligence and earnest money to secure the deal.

How did you finance this deal?

This deal was financed through a conventional mortgage with a 20% down payment. This was the first deal where my family started to become more involved and put up a lot of the money for down payment and renovations. After witnessing the successes of my first deal, my parents wanted to get involved and build a rental portfolio to secure their retirement.

How did you add value to the deal?

We did a total remodel on this house. We added a mini-split HVAC (it was previously window units and baseboard heat), changed all windows, new roof, new siding, new plumbing, new light fixtures, new kitchen cabinets, total bathroom gut and remodel.

What was the outcome?

We were able to rent the house out to several graduate students at the local university for $1385/month. The mortgage payment is only $585 thanks to the 3.875% interest rate.

Lessons learned? Challenges?

In this deal I learned even more about remodeling, working with contractors and the importance of good negotiations during the due diligence period of a purchase. There was a tree that had grown in the foundation which caused significant damage to the foundation wall. We were able to have the sellers pay for the $4,000 repair which helped to offset some of our expenses.

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

Kelly Irvin - realtor
RJ Meyerhoffer - lender