First property finished and on the market!

[David Hagen]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $54,000
Cash invested: $18,000

My first property is a single-family in a good school district for the area. The rehab was completed primarily by me and my brother-in-law, which included:

-Bathroom remodel with new flooring/hardware
-Kitchen remodel with repainted cabinets/new hardware/refinished countertop/subway tile backsplash
-New floors in all but the bedrooms (the carpet was still serviceable)
-Repainting/wall repair throughout

The property also has a 1-car garage and a fairly large fenced-in yard.

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

The BiggerPockets forums and podcasts were a huge push for me to pull the trigger and move on real estate investment. I'm primarily driven by the ROI of this type of investment compared to stocks/retirement accounts and the opportunity to improve something that I can provide to others for their enjoyment while making money in the process!

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

This deal was found on the MLS after waking up at 5am for several months before work to look at new deals each day. My approach to negotiation wasn't nearly as aggressive as I would have it now; I largely offered a price that worked for my numbers and the owners took it.

How did you finance this deal?

This deal was a conventional 30-year loan at 5.1% with a bank. After reaching out to a number of financial institutions I found one that was willing to let me deed the title into my LLC without triggering a Due on Sale clause, so I went with them.

How did you add value to the deal?

The house was remodeled to be modern inside -- new hardwood vinyl flooring, new porcelain tile in the bathroom after subfloor repair, refinishing of the kitchen cabinets and countertop, subway tile backsplash in the kitchen, new paint. Overall the house didn't need a tremendous amount of work, which allowed us to cut expenses on contractors and put the changes in place ourselves.

What was the outcome?

I'm extremely happy with the outcome! The house feels so much lighter and larger after the remodel and I received a tremendous amount of interest in the home as soon as it was listed for rent.

Lessons learned? Challenges?

I'll absolutely contract the work out for all properties going forward. I wanted to have context for what the work really takes, from material cost to amount of labor, to have a realistic picture of a financial and time commitment for contractors so as to not be taken to the cleaners with quotes.
I'll also negotiate much more heavily on my next opportunity. I've since read Split the Difference by Chris Voss and The Book on Negotiating RE by J Scott, revealing a lot of opportunity areas.

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

No, I was the catalyst for pushing for this. I was able to get a viewing and put the offer in through a realtor, but I brought the opportunity to him. If people skills aren't your forte and you really want results, put in the time to get the deal yourself! No one will care about your financial future as much as you do.

[Elizabeth Nurnberger]

@David Hagen  

     Congratulations and great job! 

     I especially like the white subway tile kitchen backsplash.   I am considering installing the same thing in our 6 rentals as we turn them.  I typically hire 90% of our work out to a contractor, but have heard installing backsplash is fairly straightforward.   

     My plan is to take a class at Home Depot on installing backsplash with my husband and 10 year old son .  I think it's an upgrade that is noticeable & appreciated.  Plus I like to provide our our 10 year old with paid work through the business and thought this might be a good fit!

     Any recommendations or tips? Is it fairly straightforward to install?   Favorite material?  Any idea on how much you saved vs having a contractor install?  

     Thanks for any insight.  Congrats again, your home looks great!