Flip and hold covid year

[Daniel Snyder]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $100,000
Cash invested: $25,000

Purchase to buy and hold. Completed a 3/4 gut renovation. Begin as a 3/1. Value add to a 3/2. Renovation took almost a year because we completed much of the work ourselves. Completed new windows, interior doors, plumbing. It has been rented ever since.

March 2022 Post reno appraisal = $190,000

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

I have been wanting to begin real estate investing fast several years. The covid boredom got the best of me. We were finally able to find a deal we could manage to get under contract. Buying a fixer upper is right up my alley.

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

This property was on the MLS. I guess really we just got lucky. We made an offer based on what our down payment could buy. The family selling the house had had a death. Two sisters were selling the house of their late mother. The one thing that stands out from our first showing was the smell. There was an overwhelming odor of cats.

How did you finance this deal?

We deal with a small local bank. They offer a renovation loan that converts to a standard mortgage upon completion of the project. They require 20% down then will finance up to 80% of the ARV.

How did you add value to the deal?

We completed 3/4 of a gut. Added new plumbing, new electric, new windows. We also added a second full bathroom. Removed a few walls and painted the kitchen. All new flooring installed.

What was the outcome?

We exceeded our initial outcome. Yes this project took longer and cost more, but the ARV was a surprise for us.

We were able to get renters in within 2 months of completion. Funny story here though; we had actually dropped the rent to attract more views. We advertised as no pets allowed and that lost us a lot of lookers. We did a facetime showing and this family was so impressed and in love that they offered $100 over asking rent. The only caveat was they have a cat. Well we took the offer!

Lessons learned? Challenges?

Budget for surprises. Time, money, materials, contractors.

Don't be afraid to tear out something and completely redo instead of patching.

Be patient when it comes time to market and get it rented.