4 Bed/2 Bath Tri-Level

[Christina Linn]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $90,000
Cash invested: $28,000

I had a real estate agent send me a message on facebook and say she knew of a great deal if I was interested. It turned out to be an exceptional investment. This house was smoked in for decades and smelled horrible, plus had animal waste everywhere; however, we spent $10,000 doing simple repairs and paint/carpet to turn it into a great investment. The house is a 4 bed/2 bath tri-level.

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

A real estate agent contacted me and told me she had a great deal. I knew we wanted to invest in more real estate, but we didn't really have the money after having just bought our 8-plex in May. I reluctantly looked at the house without even telling my husband I was looking and it was interesting because of it's size, location and price.

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

The deal fell into my lap. The man selling it had moved out of state because he was ill and wanted to be closer to his children. The house smelled horrible, so it sat on the market for a very long time. After I looked at it I called my husband and told him I wanted to put an offer in on the house. It had been listed for $160k, but the price dropped to $120k the day prior to the real estate agent contacting me. We agreed that if we could get it for $90k it was a no-brainer. He accepted!!

How did you finance this deal?

We financed through a local bank and closed the deal in 1 day!! It was amazing! We got a 5/1 ARM with 25 year amm for 5.25% interest. We put 20% down and put cash into repairs to get it ready to rent.

How did you add value to the deal?

We painted, replaced flooring, added a wall and door to separate basement (made a mother-in-law apartment) and cleaned lots of grime.

What was the outcome?

This house turned out to be an amazing investment. With $100k in we could sell today for $150k, plus we made it into two rentals and collect $1525 a month in rent. I love this house! We could easily turn it into one rental again by simply removing and framing inside a door opening.

Lessons learned? Challenges?

We learned a lot with this deal and I learned how to remove emotion from our deals going forward. I put an offer in that I knew would not be accepted, but it was a starting point. I was shocked that the seller accepted our low offer! I made a big mistake of lacking understanding of agents and how the contracts can work, so I hurt a friend (the one who contacted me about the house) by contacting another agent to represent me. The disaster this caused pushed me to get my own license.