Buy and hold in West Chester, PA

[John P Becker]

Investment Info:

Townhouse buy & hold investment.

Purchase price: $190,000
Cash invested: $82,000

This was an estate sale. The executors reached out to us because we had flipped the house across the street. There was a good amount of debt on the property so the negotiation took a long time. We struggled paying 190k because we had bought the house across the street for much less but the market was crazy hot. Up until this point we mostly did flips but we decided we could make this one work as a buy and hold. We were able to get a mortgage on the property and secure a great rate. The house is now probably worth over 300k and rents are growing.

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

It was an off market deal

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

We had met the executors while we were flipping the house across the street.

How did you finance this deal?

We got a mortgage for the purchase and paid cash for the rehab.

How did you add value to the deal?

This is a rather small house with no basement so it was hard to add value. We just added value by rehabbing the whole house. One thing we did was basically delete the small back yard and just created a large gravel parking area. Parking is hard to come by in this section of town so having ample parking is a plus.

What was the outcome?

We were able to rent it rather quickly and the value and rents continue to appreciate. We are currently looking at pulling some of the equity out by using a HELOC. We have a good rate so we don't want to do a cash out refi or sell it.

Lessons learned? Challenges?

At times it looked like the deal wouldn't go through because they had the house appraised and what we were offering was less the appraised value and our offer wouldn't cover the debt on the house. Eventually they found a little bit of money and we were able to close the deal.