SFR TACOMA Rental That We Now Own and Live In

[Account Closed]

Investment Info:

Single-family residence buy & hold investment in Tacoma.

Purchase price: $205,000
Cash invested: $90,000

Bought this house while we were living in Long Beach, Ca. It was done doing a 1031 exchange with a condo we owned in Long Beach we were renting. We now live in this house free and clear.

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

We wanted to live in the Seattle area at some point as my wife grew up here. We basically came up and drove around areas we could afford and settled on Tacoma. Though, at the time everyone up here thought we were crazy because Tacoma 5 years ago had a pretty bad stigma. But we saw the potential, coming from Los Angeles, and seeing so many "rough areas" come up overnight. Now everyone thinks it was the best idea ever to invest here and hoping to continue with a small mulitplex soon!

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

It was a 1031 so it was a bit difficult. I wont get into the difficulties but it was basically hard to negotiate due to the fact the seller knows you are on a limited time frame and that you have to go with 1-3 properties you have picked. I learned a bit about 1031, but do not think I would do it again just for a SFR.

How did you finance this deal?

Traditional with over 20 percent down.

How did you add value to the deal?

Studied the rent in the area vs. cost of mortgage to make sure we would cash flow. Though we owned a smaller rental we didn't know much about what we were doing. In fact, we still don't but trying to learn more.

What was the outcome?

Great. We live in the house now, without a mortgage. That was one of our biggest goals was to live in a house without a payment. Not sure if it's the best thing to do for investing but I know it gives me peace of mind coming from LA where the homeless population is massive, rent is high and rising and debt to income ratio is bananas there.

Lessons learned? Challenges?

Hearing the word 1031 makes me ill now. In hindsight for the time, I wish we would have bought a duplex or triplex for increased cash flow. Self managing a place from out of state is rough. We paid a bit for small repairs. I've always worked on and fixed up our own properties as well is our rental in Southern California so it's painful to pay for small repairs I am capable of doing.

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

We did. He was great. He just covered the paperwork and we did all the finding and footwork. Been a while and need to find his name.