New SFH purchase with great location

[Dan Moore]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $193,000
Cash invested: $96,500

1/4 mile from Wake Tech Community College main campus, 1/4 mile from coming I 540 interchange on 401. In the best school district in my zip code.

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

It was all about the location. We originally passed on this deal because the house didn't have enough value add opportunities but the location was awesome.

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

Our realtor put us on this deal. The house has a foundation issue prohibiting it from getting a conventional loan which eliminated many buyers. The sellers were in a strong cash position IF they sold but they couldn't perform any repairs. Still we passed on it, but through the efforts of our realtor, they made a reverse offer that was right on the number we were going to lowball offer with. We accepted.

How did you finance this deal?

Cash purchase, but we are already approved for a loan with our local community bank, North State Bank. We'll finance at 50% LTV once the house is refit and we have a renter in place.

How did you add value to the deal?

We are converting one of the rooms into a bedroom which will turn this house into a 3 bed, 3 bath house bumping the rent opportunity quite a bit. There are numerous items that need to be repaired but none are very big. We originally passed on this house because there wasn't enough value add but during home inspection we discovered many small items that needed to be addressed. We negotiated a lower price to offset the needed repairs.

Lessons learned? Challenges?

We would have walked from the deal without making an offer. Our realtor put this deal together by being aggressive and knowing her seller. She negotiated the price after we'd already moved on, and she hit our number without us having told her what it was.

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

Jane Ball with Be Home Realty