First buy & hold rental

[Miguel Capote]

Investment Info:

Single-family residence buy & hold investment in Navarre.

Purchase price: $87,000

Sale price: $125,000

This was our first home purchase and as our family grew we decided to rent the place out rather than sell it. Over the year it was rented out it appraised enough that we were able to sell the property to the tenant for a good profit.

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

The property market in our area was moving up and new houses were popping up on our street. So it was a no brainer to hold on to the house while letting someone else make the payments.

How did you finance this deal?

We financed the deal using a VA loan.

How did you add value to the deal?

We never added any actual value to the house besides taking good care of it and adding a large shed in the back which doubled as a workshop. Keeping the house in good working order and clean took care of everything else.

Lessons learned? Challenges?

1. Always have the property manager check with you before doing any work on the property. A drunk driver ran over the mailbox. It would not have been a big deal if they were to have notified us before they sent their handyman to the hardware store and charged us $55 labor + materials (1 wood post/1 plastic mailbox) to put a new mailbox in the already existing hole. 

2. Invest on a moisture sensor for the A/C system which automatically turns off the A/C when water accumulates on the bottom of the condenser. Our tenant was a single active duty airman who worked long hour and was rarely home. One day the A/C drain line got clogged and the water started to pool inside the house. Since the room closest to the A/C unit was the spare room which he never used, the issue went unnoticed for a few days. Those few days cost me about $1,200 to repair with ServPro, that brand "like it never even happened" is a bit false. Trust me, my bank account remembers.

3. Always keep money in a contingency fund...always. See lesson 2 above.

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

Yes, we worked with our local broker who helped us find the house for a good price in a good neighborhood.