SFH in Saint Louis - great schools/neighborhood

[Susan Shelby]

Investment Info:

Single-family residence buy & hold investment in Cleveland.

Purchase price: $176,500
Cash invested: $176,500

Latest SFH we've added to our portfolio. 4 bedroom, 2 bathroom restoration project in excellent school district and nice neighborhood. ARV around $375,000. Property was neglected and needs improvement which is underway.

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

St Louis, NOT Cleveland. This house is in a wonderful neighborhood with terrific schools. The ARV looks good, and the property basically needs the kind of updating and rehabilitation that we specialize in.

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

Found it by looking at each available house in our region of interest. It took a few months. We beat out 3 other investors by going all cash, waiving inspections, and closing in 15 days. Negotiated with an escalation clause that started $5K below asking, and went to our max in $1,000 increments . This saved $10,000 over our top price. That was a good feeling.

How did you finance this deal?

We went all cash on our savings. We’ll finance with a home loan once it’s ready to rent. My husband is my partner.

How did you add value to the deal?

By being willing to put in the sweat equity. Also, there is a bathroom and large master bedroom in basement, but per code it needs an egress window. We’ll put one in for $4,500, and increase the value $14,000.

What was the outcome?

We just started working on this one, so keeping our fingers crossed. But getting the property at a great price was a very good start.

Lessons learned? Challenges?

Right after closing we learned that there had been a utility emergency involving a main line from one month up through the day before we closed. This made me furious, as it wasn’t disclosed. I don’t know how to make someone disclose information, but I find it very dishonest. It made me question everything the seller said.

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

Real estate agent Jay Phillips was a tireless partner in helping us to identify well-priced rehab homes in great school districts and neighborhoods.