Base hit to home run deal

[Casey Coffey]

Investment Info:

Single-family residence buy & hold investment in Elizabeth Lake.

Purchase price: $290,000
Cash invested: $100,000

Elizabeth Lake Property that was initial just a base hit property ended up being a huge win.

Original list price: $420k
Original offer accepted at $350k
Closed at $290k after negotiations
Rehab: $20k

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

Original plan was to turn it into two units as it has and upstairs and downstairs entrance as well as a master bedroom upstairs and downstairs. This plan was going to allow me to cash flow but was going to take more capital to complete. After getting the price down to $290k i decided to leave it one unit as was still able to cash flow with less capital needed

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

This was an on market deal. Listed for $420,000. After 2 weeks on market price was dropped to $400,000 which showed me they were eager to sell. The agent let me know the owner passed away and the seller has no blood relationship to the previous seller and knew nothing about the property. With this information i knew they didn't have any attachments to the property so i offered 350k knowing the home was worth 430k ARV. After home inspection i was able to negotiate the price down to 290k.

How did you finance this deal?

25% down conventional loan. 6.499% rate on investment property, happened to lock rate at the best time of the year a couple days before rates started to go back up.

How did you add value to the deal?

Although it was determined to not be needed, i did a repipe on the property, and performed cosmetic upgrades.

What was the outcome?

Purchased for $290,000, put 25% and put $20,000 in repairs.

ARV: $430,000

PITI: $1950

Rent: $2700

Cashflow: $750

Equity: $217,500

Cash on Cash return: 9.5%

ROI: 150% year 1!

Lastly, .9% rent to value ratio in Los Angeles County which is unheard of.

Property was rented before first mortgage payment so 0% vacancy.

Lessons learned? Challenges?

It never hurts to try. My agent did not want to submit new offer at 290k as she thought it was a slap in the face to the seller and agent. To both of our surprise, they didn't bat an eye, they immediately accepted our 290k offer. Sometimes you have to go with your gut, even your professional agent doesn't have all the answers.

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

Leasing Alert Property Management based out of Los Angeles County is managing this property.