Roach and Insect Fix and Keep

[Jonathan Small]

Investment Info:

Single-family residence buy & hold investment in Valdosta.

Purchase price: $75,000
Cash invested: $31,000

I found this property using a local realtor that specializes in foreclosures. However the property have been extremely neglected. It had one of the worst insect and roach infestations we have ever seen. I financed the property using a local bank. The bank gave me favorable terms since I have a number of properties with them. I was able to use equity from another property as part of the down payment and renovation cost. I used my property manager to management renovations.

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

This was a late model single-family house in a good quiet neighborhood. I like the property because it was in a great area and next to a city park. It was built on a slab and only 15 years old.

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

I used a realtor that focuses on foreclosures. I first met this realtor when I bought five homes he owned personally.

How did you finance this deal?

I financed this still using a local bank. The local bank gave me the purchase price and renovations. The down payment and renovations was collateralized by another properties equity

How did you add value to the deal?

We did a complete renovation on this property that included floors, appliances, roof, hvac, water heater, countertops, and fixtures

What was the outcome?

I'm keeping this property as a long-term rental. I do not intend on selling this one since this property has a good bit of equity and is low maintenance

Lessons learned? Challenges?

Purchase price and Renovations total about 110,000. After repair value was about 150k. I was able to do a 85% Cash out refinance with the local bank. The property rents for $1250. I was able to move an existing tenant from an older less expensive property into this one and increase rent. My plan is to keep this property since I don't have any of my money in the property and it cash flows. I will keep short-term 3 to 5 year financing on this property using the local bank. This will allow me to us