Buy and hold was worth the wait

[Andrew Newcomb]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $189,000
Cash invested: $6,000

First investment with an 80/20 loan from Country Wide (remember them). I had terrible credit, barely a job, but I had big dreams in my 20s so they gave me a couple loans. Then the market crashed in 2008. But I was able to remodel and refinance a couple times and eventually to got out of the bad terms on the original loan(s). Currently have a 30 year conventional mortgage at about 3% interest. Moved out in 2012 and fortunately had no problem renting it out over the last 11 years.

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

After college I saw the potential of paying a mortgage instead of rent so made a bold decision. It was rough seas, but worth it in the end to break into the real estate game. I can't appreciate enough the knowledge and lessons i learned from that first deal.

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

It was the only thing in my price range in Portland Or!! I grew up in the area and drove passed the for sale sign. Negotiation was me calling the real estate agent. I didnt even have an agent (wow I was naive... AKA dumb)

How did you finance this deal?

Good old country wide financial gave me a subprime mortgage. It was an 80/20 loan where the 20% down was also a loan at 7% and it was an ARM that adjusted to something outrageous after a couple years.

How did you add value to the deal?

Sweat equity. I became very handy and remodeled most of the home. Took out walls, replaced shower, sinks, updated plumbing and electrical, you name it, I did it. All of this while I lived there and rented out the second bedroom to a buddy.

What was the outcome?

Still own it and rents well. I moved out in 2012 when I got married. At the time the rent barely covered the monthly expenses, but as rents have gone up over time we get more and more rental income.

Lessons learned? Challenges?

I learned (even back in 2012) that shopping for a conventional loan online is way better than choosing a lender based on a referral. You have to do your own research and compare rates. We got way better rates from online lenders than we did from local lenders or big banks or local credit unions.