3 Bed/1 1/2 Bath Townhouse - My family home

[Christina Linn]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $118,000
Cash invested: $30,000

This was the house I grew up in. My parents had divorced years earlier and my dad passed away. My brother and sister were hard up for cash (their part of the inheritance) and literally begged us to buy the house. We foolishly paid top dollar for it as to not cheat anyone out of money, but it's been a great investment. This was our first intentional REI.

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

I wasn't really interested in buying this house, but my brother and sister couldn't afford any type of utilities or repairs, so it was our safety from footing all bills until the house sold. Houses typically sit on the market for 6+ months here.

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

We did no negotiating at all. We agreed to buy it for $118,000 after comparing to other similar homes on the market.

How did you finance this deal?

We used traditional financing on a 30 year fixed mortgage to purchase this house.

How did you add value to the deal?

I spent months fixing things that needed fixed, including sanding and staining the cupboards. I repainted the entire house, shampooed carpets, patched holes in walls, fixed plumbing and refinished the deck.

What was the outcome?

This house taught us that money can actually be made in real estate. We cash flowed over $600/month with our first tenants.

Lessons learned? Challenges?

Treat family like everyone else. There's no way we would have paid what we did for this house if we had bought it from a stranger and we shouldn't have from family either. Lesson learned... I also spent way too much time trying to make everything perfect. I should have gotten things ready and rented the house and then fixed things up between tenants, rather than trying to make it perfect the first time around. Tenants do damage anyway - our first ones in this house did over $5k in damage.