Creative financing to get in the game

[Brice Gallow]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $495,000
Cash invested: $55,000

Creative financing deal through family to add value and hold in high growth area.

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

My wife and I were presented with an opportunity to purchase a 3bd 2ba home through family. I saw the area growing at a steady pace, a lot of large name companies investing in the area, and home values increasing mainly due to so many new track home HOA communities being built. I thought this was a good opportunity to get in the area, add value to an older non HOA property & see how the community continues to grow. We also got to move out of downtown LA and in to a safer, more comfortable area

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

Deal was presented through family. We had a unique situation where the previous owners (sister and brother in-law) had to move to another family home to help take care of a parent. We negotiated based on current market value and what they would need to get out of the house and fix the home they would be moving to.

How did you finance this deal?

The deal was done through refinancing the property which allowed our family members to get the money they needed to fix the propriety they would move to. This established a mortgage that was about $300 more than our apartment in DTLA. It was a no brainer for us to get in the game and see how we can add value in a growing area.

How did you add value to the deal?

We renovated the inside, I did some hands on work but we also had a GC. They took down walls to the kitchen and opened it up. Fresh white paint through out home. Updated countertops with waterfall finish. New light laminate flooring which came out great. I did a custom cement look fireplace surround also to hello bring it together.

What was the outcome?

Home is very appealing on the inside with my wife’s touch on the decor. We are working on the backyard now and will be replacing the fence and adding turf in the next few months we will then paint the outside of the home and continue to hold until we find another property and can use this as either a short or midterm rental.

Lessons learned? Challenges?

Don’t be too comfortable with the GC. I hired a younger guy who had some experience as a project manager then got his license. We had good talks. Work was steady initially then tapered off. I had to re-establish myself and set stronger guidelines with the GC. They completed work on time but was not exactly the quality promised in the beginning. Some small details not done to my satisfaction but overall I was pleased with the experience. Seeing how things work and being involved hands on.

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

The refinance was done through Navy Federal as my father in law is also on the mortgage which has benefited us all, he’s like the liaison of it all. Navy Federal has been a great asset though.