Buy & hold turned flip

[Nicholas Smith]

Investment Info:

Townhouse buy & hold investment in Lithonia.

Purchase price: $100,000
Cash invested: $6,000
Sale price: $189,700

Purchased townhome with 5 year interest only balloon loan for $100,000. 3.5% interest. The median rent in the area is around $1500. Had terrible tenants and had to turn place into a flip to get above water.

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

I saw the growth in the area and knew it would be the stepping stone I needed for financial freedom.

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

It was my uncle's free and clear townhome. I negotiated a deal to give him the cash he wanted for it but only after a 5 year balloon loan.

How did you finance this deal?

Owner financing. Agreement was a no money down, interest only 5 year balloon loan for almost $300/month in interest. At the end of the 5 years, or when I wanted to pay off the loan, $100,000 would be paid to owner for townhouse.

How did you add value to the deal?

Rental tier renovations to the property through credit cards.

What was the outcome?

Horrible tenants drove us to pivot and sell instead of refinance. Ended up making over $50,000 in profit.

Lessons learned? Challenges?

Never let family live in your investments.