It feels like the first time

[Aaron Millis]

Investment Info:

Single-family residence buy & hold investment in Auburn.

Purchase price: $127,000
Cash invested: $22,000

4 bed 4 bath rental in Auburn AL
Purchase Price: $127,000 Current Value: $167,000 Rent: $1700 ($425 per room)
Loan: Conventional 15% down Total Cash Invested: $23,000

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

After reading BP's Book on rental property investing and listening to a good amount of podcasts I knew that I wanted to go the buy and hold route. This property stood out to me mainly because of the purchase vs rent ratio.

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

After trying and failing numerous other ways to get one of these homes- I walked into the office of one of the more popular realtors in the area. I knew he had a lot of rentals himself and was probably very well connected. I was right. The same day he found a seller and I offered him exactly what he was asking. The property appraised for exactly what I bought it for. So really I didn't negotiate at all because I thought the numbers worked for me and time was a factor. I was right:)

How did you finance this deal?

As a single e-4 in the military I managed to save up about 30K over time. Almost all of that went towards my down payment and the rest I held for reserves in case something big broke. I used a conventional loan 15% down with 4.375% interest rate. Also I just used a local bank. I tried using a big name lender initially but that turned out to be a headache and cause problems.

How did you add value to the deal?

I replaced the carpet in the bedrooms with a luxury vinyl flooring from a local surplus warehouse store. Most of these homes in my area have carpet in the bedroom and I know a lot of people, approx 18-30 years old, prefer hard surface flooring. I know this because I asked 100+ strangers around town what kind of flooring they preferred in their room.

However 99% of the value add on this property was just "Right place right time". The value of this home increased about 40K in 1 year.

What was the outcome?

The outcome was/is great. The money I put into this deal tripled in 1 year. I have a cash flowing rental in a hot market. I'm currently renting to amazing tenants that I have had 0 problems with so far.

Lessons learned? Challenges?

I've learned that LOCATION is about as important as everyone has made it out to be. There are a lot of factors that play into this deal being such a great one for me... but the 1 thing that trumps all is location.

Vacancy was and is the scariest thing to me as a landlord. My #1 goal was to have a property that likely never be vacant, and would always be in demand. I feel like I have found that here buying a property within 5 minutes of a major university that pulls students from all around.

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

If you are new and looking for a rental in Auburn AL I would recommend Kurt Hayley.

He/his family is big in the Real Estate world here and most people know who they are. I have heard all kinds of positive/negative things from people around this town about his family as professionals. I don't know any of them but him so make your own decisions. But I will say Kurt is great. Very well connected, very professional, and very trustworthy!