Taking over a New Build back in 2009

[AJ Shepard]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $145,000
Cash invested: $45,000

Purchased a property that was under construction. The person that started the new construction unfortunately passed away. I took this property over and finished it. Once the remaining items were done I refinanced the property. It was worth approximately 225k and pulled 165k of money back out. Still own to this day and provides a great cashflow.

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

At the time I was working for a general contractor (Heavy Industrial) and traveling all over the US. It was nice to invest in the place that I resided and I knew that I could get the work done with my time off and the resources that I had available at the time.

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

MLS - At the time there were a lot of REO's coming on the market. This one was exceptionally underpriced and not just anyone could take this project over and finish it.

How did you finance this deal?

Line of Credit from bank of DAD. Used my own money for the rehab and then pulled my money back out with a refinance. Project took about 3 months.

How did you add value to the deal?

It was a flag lot that was not finished. I put in hardwood floors, cabinets, bath, doors, concrete driveway. Landscaping. In addition to all this, I had to finish out the open permits on it.

What was the outcome?

Still own the house today. Have used the cashflow to live off of, but am contemplating refinancing it.

Lessons learned? Challenges?

Lesson that I learned is that I shouldn't be afraid of taking on large projects. When bought, it was not usable, rentable, and woulnd't be until complete.

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

Had an agent at the time and a lender at the time, but I was new and this was the only deal that I used them for. I started shopping around after this project. This was the 2nd house that I did (1st was the one that I lived in).