Historic Craftsman Downtown Rental

[Belinda Hunt]

Investment Info:

Single-family residence buy & hold investment in Kalispell.

Purchase price: $84,000
Cash invested: $40,000

Historic 1890 Craftsman, Large four bedroom three bath home located in desirable eastside neighborhood at the heart of downtown Kalispell. We remodeled in 2015 with updated appliances and quartz countertops in kitchen.

Home sits on corner lot with a large fenced backyard. There is a covered garage, RV parking, and off street parking.

When we purchased the home in 2015 to realtor said he felt it was a total tear down. We saw differently. The home had great bones, was located in a fantastic neighborhood. The kitchen was dated and all the bathrooms needed a total gut. The previous owners had a lot of fun with color which was also a turnoff to many buyers.

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

We love ugly houses. The scruffier the better. When we saw the listing on this home, we were attracted by the price and the neighborhood. The home itself had been a rental for over 15 years and the sellers were don't wanters. Our evaluation of the property indicated good bones but a lot of cosmetic work and some minor structural and remodeling work. Our long term goals include acquiring cash flowing properties. Based on our early analysis this property appeared to fit that box.

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

We found this deal using local MLS. We worked with an agent to negotiate the deal.

How did you finance this deal?

We purchased cash and invested our own money to rehab then refied to pull our cash back out.

How did you add value to the deal?

We did about 30% of the work ourselves. Updated kitchen with new quartz countertops and stainless appliances. We gutted and remodeled all bathrooms. Changed upstairs quarter bath to full bath by knocking out a wall into a funky closet space. We refinished original wood flooring downstairs and put in new carpet upstairs and in downstairs bedrooms. Installed a new HVAC unit. New paint throughout. Cleaned up yard, rebuilt existing garage, and put in additional fencing to accommodated RV parking

What was the outcome?

We were able to refi to pull out all our cash invested and have had excellent luck keeping the property rented for a profit.

Lessons learned? Challenges?

Overall this property acquisition, rehab and refi went smoothly. We had originally intended to finance the acquisition but had challenges with the appraisal. (We were purchasing as and the appraiser kept noting subject to conditions). Our biggest challenge on this property was painting. With the vaulted ceilings, wood trim on every doorway, and crown molding through we decided a professional painter probably could have finished the home a lot faster for about the same money.