Our second investment: the McCleary house

[David Stone]

Investment Info:

Single-family residence buy & hold investment in Mccleary.

Purchase price: $25,000
Cash invested: $25,000

Remodeled inside and out, this open-concept home features three bedrooms downstairs with a large master bedroom upstairs. Enjoy the large, partially fenced front and back yard or take an easy stroll to the nearby park and restaurants. With easy freeway access and only 20 minutes to Olympia, what is there not to love!

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

It was a distressed property for a cheap price.

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

We drove past this FSBO for a year while contacting the owner on and off trying to structure a deal. It was offered at 45k and after many failed attempts to acquire the property for less, we finally offered 3 options (all cash and 2x owner finance options each with variable money down and purchase prices). The wife of one of the owners responded and said they would take the low cash offer.

How did you finance this deal?

Private money (private investor took cash out from a heloc on their primary home)

How did you add value to the deal?

We painted the outside, put on a new roof, and completely renovated the inside (previous owners did drywall, flooring and kitchen already but didn't want to proceed any further in rehabbing the property)

What was the outcome?

The home is safe and rent-ready. We now rent the place at $1460 a month.

Lessons learned? Challenges?

We ran out of money from our private money investors about 75% of the way through the rehab and had to move in to the property and finish the rehab (although we were living in a live-in flip and rented that place out). Check out my blog on BP for the full story!

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

No, we bought off market ourselves FSBO.