First Investment Property- any input appreciated

[Rachel Strothman]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $39,900
Cash invested: $65,000

Purchased January 2023. Still renovating. 80% complete. Total of $70k invested once completed bringing a cash flow of $995/mo. Can be liquidated for $110k+ according to area comps. Property was extremely neglected. Created "open concept" kitchen. Updated and replaced the plumbing and electrical among other things. Increased the bathroom size by taking sq. ft. out of the main bedroom closet giving the bathroom much needed space. Installed washer and dryer hookup.

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

Amazing off market estate sale. The house was a pocket deal for $39,900. I've not seen ANY other property in ANY condition in this area at that price. Or even near that price for that matter. I was aware that I was biting off a huge chunk for my very first investment. But not taking the deal wasn't an option. I had to pull the trigger at some point.

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

This deal actually fell into my lap. I was speaking to a VERY inexperienced agent. I will not mention their name out of respect for privacy. But this agent didn't have the slightest idea of how to work with a buy and hold investor and had zero experience in the Indianapolis market for that matter. My agent's co-worker actually knew the owner of the property and offered it to me at $49,999. I countered with $39,900 and surprisingly, my offer was accepted!!

How did you finance this deal?

Cash

How did you add value to the deal?

Renovation, updating with LVP throughout, increased bathroom square footage, all new bathroom, improved the "flow" of the floor plan by creating an "open concept", added washer/dryer hookup, general upgrades, finer finishes.

What was the outcome?

Still in progress but coming along very well

Lessons learned? Challenges?

VET CONTRACTORS! Be extremely careful who you trust. I was taken advantage of by a contractor and it was a hard lesson learned. He managed to overcharge and underperform until I fired him and demanded a $1,000 repayment of funds I gave him in advance for work that he claimed was already done. It certainly could have been much worse. But without a doubt vet your contractors!!!

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

I would NOT recommend the agent I used in this deal.