Win win - $165,000 increased valuation + $2,000 cash flow per month

[Alan Hon]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $160,000
Cash invested: $100,000

We purchased an REO, gutted it to the studs and rebuilt it. Current market value = $425,000 resulting in $165,000 increase in value PLUS it currently produces just over $2,000 per month as a STR. Win win.

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

I was provided four properties to choose from. Did my due diligence to see that this one had the most potential. Having maximized the potential of properties for more than 15 years, we knew we could do it again.

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

We saw the property advertised on the internet, contacted a local realtor, walked through it and made a cash offer. When they asked for highest and best we held strong as ours was for cash and we got it.

How did you finance this deal?

Cash

How did you add value to the deal?

We re-designed and rebuilt the property, including adding a 700 square foot deck w wet bar facing the lake, in order to make it appealing to both the home owner and the guests they were planning to welcome into it as a short term rental.

What was the outcome?

The most recent Market Assessment resulted in the valuation having increased by $165,000. The property also cash flows $2,000 as a short term rental.

Lessons learned? Challenges?

I learned the importance of hiring skilled labor. After months of waiting on the local guys to show up I rolled up my sleeves and finished it myself.

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

Yes but unfortunately he moved to Chicago.