a tear-down, build to hold story in Bryan, TX

[Daniel Schiller]

Investment Info:

Single-family residence buy & hold investment in Bryan.

Purchase price: $240,295
Cash invested: $88,623

The original structure was a dated 3/2 surrounded by 3 new HFI homes. The owner did not want to sell when the other 7 lots were purchased to build the 1st tranche of Fairway Homes.

However, subsequent tenants were evicted and the structure was left uninhabitable due to large dogs and their related debris. The owner reached out and we purchased the land for $90,000, or $88,623 actual cash per HUD Statement 3/26/14.

We simultaneously secured a construction loan in the amount of $151, 672. The house was rented prior to tear-down of the existing structure. Completed and occupied a week prior to classes starting. Rolled into a 15-year traditional mortgage.

One of those last easy deals before BCS really caught fire.

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

In-fill between existing properties.

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

We had previously made an offer on the property; a year later the owner evicted tenants and contacted my agent directly.

How did you finance this deal?

Purchased the property in cash, then secured a construction loan; upon completion rolled into a portfolio loan with the original cash purchase as equity.

How did you add value to the deal?

Tore down and build a property conforming to the other 7 houses we owned on the same block.

What was the outcome?

The house was leased prior to tear-down, and has continued to perform strongly despite some over saturation of similar properties the last couple of years.

Lessons learned? Challenges?

Always keep an eye on property owners that say no the first time you ask. At least follow up from time to time.

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

Kyle Grant. Another great Aggie.