Value add Scottsdale townhouse with strong cash flow

[George Mevawala]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $171,000

Cash invested: $35,000

Value add 2 bed/1 bath townhouse where we added an additional half bathroom downstairs. The unit has just been totally remodeled with over $35k spent on features including all new furnishings, paint, new stainless steel appliances, roof, new kitchen, cabinets, new electrical lighting throughout, new light up vanity mirrors in bathrooms, new washer & dryer, and new flooring throughout.

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

I saw an opportunity to invest in a value add property that met my code. I managed to get it for 24k under list price, and budgeted just over 30k to transition this into a fully loaded STR property. It was a complete gut project, but I am very pleased with the turnout and the cash flow we have seen in this first 6 months.

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

I found it on the MLS and toured it immediately within being on the market less than 12 hours. I went in strong on the offer, but when it did not appraise at contract price, I was able to negotiate it down with the appraisal & BINSR items needed.

How did you finance this deal?

Traditional conventional financing.

How did you add value to the deal?

We acquired at 171k put roughly 35k into it, and we are now sitting on about a 240k product. We have seen about 35k in appreciation or roughly 16% in less than six months. The strong & stable cash flow makes this a win.

What was the outcome?

The outcome was just under 3k a month in cash flow ( averaged out on a 12 month performance basis). Strong STR performance located strategically in a very lucrative area of town.

Lessons learned? Challenges?

I have learned that no matter how hard we may plan, there will always be unforseen issues and expenses with remodels. However, if the outcome is income in the long run then just to keep it moving and not get so upset.

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

I negotiated this entire transaction.