La Mesa Single Family Residence Investment

[Brianna Billings]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $565,000
Cash invested: $40,000

My first real estate purchase was a 2 bed, 1 bath, single family residence in La Mesa, CA. It is currently being rented to great tenants, with two small kids and two dogs. The house was built in 1942, and did not require a lot of upgrades, except for the kitchen and bathroom. The lot is huge, with room for kids and dogs to play.

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

I was primarily interested in this deal because I wanted to make the most out of my purchase budget. La Mesa is one of the nicest neighborhoods I could afford in San Diego County at the time, it has historic homes and a charming downtown center. This area is continuing to become more desirable, thus raising the value of the properties. The lots in this area are also great for a potential ADU build given their size and alley access.

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

I found this deal on Trulia. It was Easter weekend that we toured the home, which I think is the reason there was not as much competition. This home purchase was in the middle of the sellers' market, so we offered $30k over asking (as was typical during this time). Originally, the sellers went with another offer however, the original offer they accepted did not fill out or submit all the appropriate paperwork, so they ultimately accepted my offer.

How did you finance this deal?

This deal was financed with a 5% down conventional loan. My interest rate is 3.25%.

How did you add value to the deal?

I added value to this deal through some minor cosmetic fixes of the bathroom and kitchen. Fixtures throughout the home were also replaced. In the future, the goal is to add an ADU in the back of the home. This will significantly raise the rental income in proportion to the monthly payments.

What was the outcome?

The outcome was overall positive. I am not achieving the cashflow that I would like out of my investments, however the appreciation was on my side with this one. I am really grateful to have such great tenants that pay on time, only call for fixes that are necessary and reasonable, and who seem to be long term (less turnover). While I think I could have been more strategic with my first purchase (hustled for an off-market deal, etc.) I am happy to have gotten my feet wet.

Lessons learned? Challenges?

My main lesson learned with this house was to seek the right people as resources when making a purchase. I initially sought investor friendly agents, but ultimately used an agent who I met at an open house. While it all worked out, and luckily my agent was able to close the deal, I would have really benefitted from advice from an agent who understands investing, and could have steered me in the right direction to make the most of my capital.