House Hack- Our first Investment

[Tessa Malmgren]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $169,000

We turned our former residence into our first rental! We bought our home in 2010, lived in it until Sept 2018. Found a family and started renting it out in Oct 2018. I am self managing the property now we are currently getting 6.01% cap rate.

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

We bought our home in 2010, right after the financial crisis. It has become the cornerstone of our wealth building and investing. Once Denver real estate prices rocketed in 2015, it was tempting to sell. However with our purchasing price, it made sense for our long term goals to rent it out. So over 2-3 years we saved up a down payment for our next house, we were able to purchase our new home without selling our old one, it was an amazing sense of achievement. 

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

We found this through our realtor,as a personal home, we negotiated through him.

How did you finance this deal?

We put 20% down and used conventional financing through OCWEN

How did you add value to the deal?

We remodeled before we started renting, new paint, doors, refinished hardwoods

What was the outcome?

We found an amazing family to rent to, they signed a 18 month lease, and we are cash flowing at 6%

Lessons learned? Challenges?

Patience is a virtue, when in doubt, wait it out. Having no tenant is better than the wrong tenant. It took us 31 days to find a renter. We had many applications, however no one met our requirements. I was getting nervous, however we stuck to our guns and only lowered the rent $50.00 during this time.