Not Working Out as Expected

[Paul Keddell]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $90,000
Cash invested: $22,500

I was looking to buy a home in Akron and had a criteria I was looking for. Against my better judgement I modified the criteria based on feedback I received and this is not going as expected.

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

Want to have a modest portfolio of Buy and Hold's. This deal seemed like a great opportunity for cashflow at a low purchase price.

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

Used an agent through the Agent Finder function on BP

How did you finance this deal?

30 year fixed

How did you add value to the deal?

N/A. Home was flipped and I buy the product they sold.

What was the outcome?

Having issues with getting quality tenants in the home.

Lessons learned? Challenges?

I modified my criteria based on feedback and should have stuck with my original criteria. The tenant I had missed payments and now that he is gone we're unable to get a quality tenant in their place.

[Ryan Arth]

That is unfortunate. Given that the home was $90,000 post rehab, I have to assume that it is in a lower income area. I spoke to a gentleman yesterday who put 400K into a four unit in the city and his first tenant in the one unit bounced their first month's rent and security deposit checks. He didn't find out until the were already moved in. 

A lower price point can look like better cashflow on paper, but those earnings normally don't come for free. The usual risk/reward curve applies to real estate the same as it does to other investments.