Open to input - our first rental purchased last week

[Adam Peacock]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $329,000

Cash invested: $10,000

Bought as rental investment; elective improvement costs incurred to increase rent

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

I am a high earning business owner in the lucrative cloud consulting industry. I have a tiered investment strategy due to the high cost of homes in my area. Goal #1 = achieve 1.5M in aggregate equity WITHOUT focus on cashflow - refinancing each w/in 48 months to break even YOY. Goal #2 is to buy investment homes WITH focus on cashflow and start flipping. This specific SFR was investment purchase #1. I'm prepared to fund home #2 and #3 - just looking for good deals.

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

Our current strategy is rather simple - buy and hold $1.5M in total portfolio value. Since prices in our market is very high and finding profitable deals will be difficult, we are focusing on Buy and Hold opportunities and willing to tolerate $200-300 monthly loss before taxes. We found a property that needed minimal improvements, paid asking price (which was $20k less than avg comps in the area). When improvements complete we'll rent it out.

How did you finance this deal?

Conventional loan @ 20% down @ 5.865%

How did you add value to the deal?

Add outside patio, install new floors and fixtures, clean up garage and surrounding yard.

What was the outcome?

Rehab is in process.

Lessons learned? Challenges?

So far, I learned we paid asking (albeit $20k lower than comps) but later realized the seller was so motivated we could have offered 20-30k below asking price. Need to learn how to better read a scenario to interpret a seller's willingness to negotiate.

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

We have an agent, will recommend if they continue to perform. Hard to tell with only one home purchase.