First Stab at Affordable Housing Rental

[Jennifer Turner]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $110,000
Cash invested: $43,409

Our first section 8 rental. It's in a C-class area of downtown GNV that is experiencing rapid revitalization, so it's mostly an appreciation play.

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

The location is within a 3 block walk of three of our favorite places to hang out in the city, and we know property values there will only increase over time. The city is desperately pushing the need for more affordable housing rentals, so we are hoping to help fill that need in our community.

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

It was more or less a pocket listing that our realtor friend (from our local BP meetup group!) brought to us. The existing tenants had caused a decent amount of damage to the unit, so seller knew it needed work and was willing to go down on price for a quick sale.

How did you finance this deal?

30 year fixed commercial loan

How did you add value to the deal?

Exterior renovations and repainting, fixed damage to interior and repainted walls, serviced HVAC and water heater.

What was the outcome?

Property appraised for $150,000 so we closed with $40,000 of instant equity. Rehab is complete and we are hoping to secure a long-term tenant soon at market rent of $1500.

Lessons learned? Challenges?

Challenges--we had two trespassing issues that we had to handle alongside local police department, that increased our rehab budget and timeline. Lessons learned--always install security cameras on closing day if the property will be vacant for a while.

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

Our agent Jenn Barona was great and so was our lender, Matthew Crivelli with Freedom Capital Funding.