FTHB - Buy & Hold

[Chris Burton]

Investment Info:

Townhouse buy & hold investment.

Purchase price: $187,000
Cash invested: $15,000
Sale price: $259,000

I got tired of moving place to place and worrying about finding roommate, security deposits and not having enough money to deal with maintaining someone elses home. I took a small private loan and bought my first home. I rented out the additional bedrooms to friends and family, charging them well below market, and sold when it was time for my wife and I to start our own adventures.

If I could do it all over again I would’ve done it sooner!

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

I got tired of paying to live in other people’s homes. I had nothing to show for the thousands I spent for rent. Lived in basements, shared bathrooms, dealt with pest problems that preceeded me, etc.

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

I searched for homes based on the mortgage I could afford. If a tenant (friend) needed to move, I wouldn’t want to be in a bad situation financially. And I didn’t want to rent to strangers if I could help. I went out with a realtor friend and searched neighborhoods I was familiar with.

I was a terrible negotiator, but I figured, anything under or at asking would be sufficient.

How did you finance this deal?

Private loan that I paid when the sale was finalized. Also used 401(k) money to suppliment what I needed.

How did you add value to the deal?

I renovated the primary bathroom, kitchen, appliances and yard. The rest of the home was kept in good condition for resale.

What was the outcome?

Sold and used the cashflow for other investments.

Lessons learned? Challenges?

If I understood what I was getting on the back end I would have done this sooner. I learned how to maintain a home, work with real estate professionals, contractors, interview prospects, etc. By the end of my time, I became a realtor and worked the deal by myself for more experience.

Everything was a challenge at first. Leaky pipe? Burst pipe? I learned the hard way how to shut off water and how to winterize. I learned how much an escrow account check matters to your overall mortgage payment.

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

Yes I did.