First Long Distance Buy and Hold

[Susan Grinde]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $35,000
Cash invested: $60,000

Purchased a property with our son in Butte, MT that had two dwellings on it. Completely rehabbed the front dwelling (2bd, 1ba Folk Victorian miner's cottage) top to bottom and added 1/2 bath. Our son house-hacked for three years while attending Montana Tech. Completed rehab on the back dwelling (1bd, 1ba Craftsman cottage that had not been lived in for 40 years). The Folk Victorian stays rented to students and young families. We are considering using the Craftsman cottage as a vacation rental since our son has graduated, but we still need a place to stay when we are in town to work on other investment properties.

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

An investment property for our son to live in while he attended Montana Tech and house-hacked with one other student.

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

Local realtor

How did you finance this deal?

Cash

How did you add value to the deal?

Completely renovated both dwellings while adding a half bath to front house.

Lessons learned? Challenges?

Rehabbing 100 year old homes takes a lot of time and effort. We did the work ourselves. Again, if you do not have the knowledge or energy to do your own rehabs, hire it out. It will be rent ready much faster.

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

Katey White with Berkshire-Hathaway continues to be our realtor.

[Susan Grinde]

Butte is an acquired taste. It started as a boom town because of the copper mining. You can find a wide variety homes, 100 year old miner's cottages to grand mansions in uptown and new builds in the flats. We like buy and hold in the uptown because we found there is a demand for nice, updated student housing with historic character. We have never had problems with students trashing the homes and they are rarely vacant. We have three in uptown. We just purchased our first SFR in the flats. I think it will be a good family buy and hold. I keep wanting to get into multi-family dwellings, but have just kept to SFR because it is what I know best. Many multi-family opportunities, if you like that sort of thing.

I think that Butte is turning around. Northwest Energy recently located their headquarters in uptown, a teaching health facility (Praxis Center?) is coming to uptown, and a call center just announced locating a facility in the flats. Good indicators for new jobs and people to fill our rentals, I hope.

I think it is a good market for flippers. Houses are still pretty reasonable, but I have noticed prices climbing since we bought our first in 2014. Possibly by about 30% increase. We would love to see more flippers come in to get some of these old homes updated and safe. It would be even better if anyone that flips some of the old homes would keep some of the historic character instead of ripping it out and replacing it with new. After all, Butte is the largest historic district in the nation. Often it is not cost effective to rehab a home to it's original character, but it would be pretty cool if it could be done to preserve some of Butte's history. 

Many of the lower priced homes need lots of work. Be prepared to reroof, rewire, replumb and deal with possible foundation issues (some of these homes don't have concrete foundations!). We usually spend about 30K to completely rehab a 1,000 sq ft house that we have purchased for about 35K.

I am on a wholesaler's list and on occasion I hear from him. If I find his contact info, I will get it to you. I have always worked with Katey White at Bershire Hathaway. She is a buy and hold investor as well as a realtor. A real sweetie.

Anyways, let me know if you have any other questions or if I can help you in any way. I actually live in Washington State, but am in Butte a lot during the spring and summer. We will need to meet for coffee next time we get to Montana!

Have a blessed day!