Erik's "5 year flip" with Hometown house

[Erik Stewart]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $25,000
Cash invested: $15,000
Sale price: $30,000

SFR Rental house in my hometown. Market is super low price and I purchased from an uncle. I spent 5 years learning management from a distance, repairs/maintenance/rehabbing skills, and small town investing. Ultimately I sold this and rolled the proceeds into a 4 Plex in Moorhead, MN. I believe this to be a better use of the capital.

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

The goal here was to learn REI hand-on with a low risk investment as the barrier of entry was very low.

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

It was my uncles house that was sitting vacant at the time. We agreed on a little more than the city assessed value, for price.

How did you finance this deal?

This was a conventional loan with 20% down through the local credit union in my home town.

How did you add value to the deal?

I put a lot of money into repairs and improvements. Later I realized that I could spend that same amount of rehab time/money and generate much more equity in a bigger market like Fargo Moorhead. I consider this adding value to my way of thinking.

What was the outcome?

I sold this property after 5 years for only 5k more than I purchased it for. I had put at least 10k into it during the time I owned it.

Lessons learned? Challenges?

I like to say that I learned a lot from this property, more of "what not to do" than anything but it is still learning :) The challenges were driving 3 hours to get to the property, not having money to hire the rehab out, and operating in a small town where the rent is low. Might have been a better experience if the purchase price was low but the rents were high, but not the case here.

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

Nope!