Renting out former primary residence

[Dan Sundberg]

Investment Info:

Townhouse buy & hold investment.

Purchase price: $450,000
Cash invested: $90,000

This was our first home purchase, bought as a primary residence in 2018. We lived in this home until May of 2023, when we bought a new primary residence and rented this one out. We did very little work to the property as it was newly built in 2016. It's currently rented for $2,800/mo to excellent tenants. After all expenses it cash flows about $450/mo.

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

We bought this property initially because the location was close to downtown where we wanted to live. It was only 2 years old and was very low maintenance, which was perfect for our lifestyle at the time. I also thought this area would be a good long term buy and hold, as there is a tremendous amount of investment in the nearby corridor to revitalize it, and it's adjacent to one of the best neighborhoods in the city.

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

MLS

How did you finance this deal?

Conventional 20% down.

How did you add value to the deal?

Very little done to add value to this one. Just kept it in good condition until it was time to rent it out, and made sure to refinance when rates bottomed out.

What was the outcome?

It's now produces about $450/mo in cash flow after all expenses, not including debt paydown. It's also extremely low maintenance, so I barely have to think about it.

Lessons learned? Challenges?

Would do again:
- New construction - low hassle and very little CapEx
- Buy a primary residence to fit lifestyle. There were options that would have made better investments, but the lifestyle this enabled fit perfectly.

Would reconsider in the future:
-20% down payment. Too much cash sitting idle
- Townhouse - appreciation has underperformed

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

Myself! I self represented on this one.

[David Malott]

Nice! I also rented out my former primary. Just remember if you sell it, make it your primary again by living in it for 2 years, or buy a new property using a 1031 to avoid capital gains. Nothing spoils the fun like paying capital gains .