Turned first home into rental

[Michael Ryan]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $112,000
Cash invested: $7,000
Sale price: $150,000

The education I've gained from my first (personal) house:
-House hack (several roommates)
-Live-in-flip (floors, carpet, kitchen, yard, bathroom, paint, demo, mechanicals)
-Refinance (75% of a greatly appreciated property through both forced and community appreciation)
-Property Management (Practiced methodologies learned through the podcasts and books to find and place tenant)
-Rental (Used BP forms - Application, Lease, Amendment, and Move-in Checklist; used BP calculator to figure my numbers)

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

When purchasing our new family home we asked our lender if we could still purchase the home if we held onto our previous house, the numbers worked to keep it (cash flowing below the number I would ideally invest in, but it still cashflows positive). We always said we would try to keep this house to eventually pay for our 9-month-old son's college tuition (or part of it), borrowing this concept from Brandon and his daughter's 4-plex.

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

I watched it hang out on the MLS for several months back in 2010, I got it far below the asking price because it was a family's second home they had purchased for an elderly parent. The elderly parent could no longer live there, they rented it out for a while, got burnt out because they weren't really trying to utilize it as an investment. I got wind of this, gave a lowball offer and they accepted after some back and forth.

How did you finance this deal?

I utilized an FHA loan (and then actually got paid $8,000 from the Obama "First time Home Buyer" program :)

How did you add value to the deal?

Over the years I updated everything on the interior and also put in a new yard/landscaping.

What was the outcome?

I have turned my first personal home into my first rental and practiced many of the concepts of real estate investing in residential properties on this house.

Lessons learned? Challenges?

Practicing the concepts and techniques talked about and taught on BP on my own house taught me many lessons that I will use to begin to build a portfolio. The biggest challenge has been carrying out these processes while working a fulltime job and staying committed to the process it will take to develop a life-changing portfolio.

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

I have not worked with individuals in the real estate investment arena of real estate. It's crazy to me that those involved with real estate would not invest in it.