My wife and I wanted a rental property for passive investment income to try to get ahead in life. We are both previous renters and we thought we could own a rental and be better than our previous landlords to other people. We knew that the rental market around the hospital wasn't going away and wanted to be in on it.

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

We had been looking at investment residential properties for about two years with a Zillow agent 2020-2022. We fell in love with this house and its potential, one block from the hospital at which my wife worked in 2022. We did not negotiate because houses at that time were flying off the market within hours of being posted.

How did you finance this deal?

This deal was financed with a 20 percent-down, 5.5% investment property loan from my own bank, with a giant balloon payment at the end of 6 years

How did you add value to the deal?

The previous owner was asked to claim damage on the roof, and had it replaced on their insurance policy before we took ownership.
We revived a dilapidated shed into a hobby she-shed.

What was the outcome?

We have our 1st rental!
Our 1st investment property seems okay to me, but not great.
We did not negotiate a good purchase price; are conservative with the rent; and are learning everything as we go. With repairs and maintenance, at the end of the first year we have a net return of negative -$9834.
However we see light at the end of the tunnel: we can pay off the mortgage in another 2 yrs and avoid the balloon payment, then we calculate finally earning profits during the 6th year.

Lessons learned? Challenges?

1) Perhaps finding a cheaper property to buy, and becoming a negotiator in the offer.
2) We still need a list of trade contractors with whom an ongoing relationship can be maintained. (we once paid $1800 to a big name plumber in town to replace 6in of plastic drainpipe under a stand alone tub).
3) We need better understanding of the legal structure (LLC) that we should have in place for our property, and also a tax advisor (CPA) to help with understanding deductions.

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

Scott Brake on Zillow has been a trusted real estate agent for buying our homes, during the many walk throughs he was quick and honest to point out problems he saw with the homes from his experience as an agent and also a landlord.