Small investment turns into repeated rewards

[Rachel Chwaszczewski]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $23,000
Cash invested: $30,000

SFR in D class area that had been partially remodeled (poorly) with a great yard that was fenced in. We allowed pets since the fence was a selling point.

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

The price point - in the beginning we did not have a ton of money to start investing and the total buy in for home and small minor upgrades was $30K!

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

We found the deal via a mutual person who knew the seller.

How did you finance this deal?

Private money from a business partner - this deal was so uncomfortable for him he asked if he could use our vehicle as collateral - just in case!

How did you add value to the deal?

The major issues had been addressed by the seller, who had to let go of the property. We used the remaining 7K after the purchase to make modest changes such as paint to the exterior and kitchen cabinets, new carpet, tile backsplash and new lighting.

What was the outcome?

We rented the property immediately and refinanced into a perm loan once it has seasoned. We continued to invest heavily in that specific neighborhood bc we saw so much potential. After renovating multiple duplexes and building affordable spec houses it began to increase the value of the properties and rents received. Other investors followed suit, the gov't invested in infrastructure and the area began a true change from barely habitable homes to a decent, safer C+ neighborhood.

Lessons learned? Challenges?

Take a chance on the ugly duckling and invest in doing the right thing by the tenants. We developed our rental strategy in this area as we were committed to providing safe and habitable homes to people. We also made sure the properties were on trend finish wise which brought in higher quality tenants and vastly improved the appraised values when we went to refinance. It also proved to us that when you invest and respect your property, your tenants, for the most part, will as well.

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

No these were all off market deals.