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 10.39% cap rate.

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

We bought this home as our primary after the recession in 2010, and it has become the cornerstone of our wealth building. Once the Denver Real Estate market boomed in 2014 it was very tempting to sell, our appreciation more than doubled! However, with our purchase price it made sense to rent it out as a long term investment. We saved up a down payment for our next primary and bought in Sept 2018.

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

We used a realtor and found it though him

How did you finance this deal?

Traditional financing, 20% down

How did you add value to the deal?

We painted inside and out, refinished the hardwoods, added a high-efficiency roof swamp cooler

What was the outcome?

We have a great cash-flowing rental that is giving us a 10.39% cap rate, with an over 15% Cash on Cash return.

Lessons learned? Challenges?

Patience is a virtue- when in doubt wait it out. It took us 30 days to find a tenant that met our requirements, it was tempting to just "get someone in there", however we only lowered the rent once, and we found a great family to rent to!