My First Investment Property Purchase

[David Paul Rabalais]

Investment Info:

Single-family residence buy & hold investment in Spring.

Purchase price: $145,000

Cash invested: $29,000

This is a 3/2 home in a good, desirable neighborhood and also a good school district. Property has solid rental history, with $275/mo cash flow after all expenses are accounted for.  As a bonus, it has appreciated about $25,000 in value since I purchased it 2015.

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

This was my first investment property purchase. I selected this house for several reasons: priced below market value; good layout; good school district; desirable neighborhood where market-priced rentals do not stay on the market long; and, good appreciation potential. Since I was new to investing, I wanted to start with a single-family home that would be low maintenance, rent quickly, and immediately provide cash flow.

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

I worked with an agent. We viewed and made an offer on the house the day it went on the market. The house had filthy tenants - it smelled bad and was dirty - but otherwise in great condition. Given the condition of the house, and knowledge that the current owner was motivated to sell, I was able to purchase the house for around $12,000 market value.

How did you finance this deal?

Traditional financing. I put down 20% and financed the balance.

How did you add value to the deal?

After a thorough cleaning, I replaced all carpets; painted several rooms with modern colors & touched up the others; upgraded a few fixtures; and, made several small but impactful cosmetic improvements.

What was the outcome?

The house rented in less than a week to wonderful tenants - a young family with two small children - who signed a two-year lease and loved the house. There were a few unexpected repairs during the first year, but I attribute them mainly to poor maintenance of the previous landlord and tenants.

Lessons learned? Challenges?

The biggest lesson learned was that good screening and requirements equal good tenants. This is something that my agent emphasized at the beginning of our relationship, and turned out to be excellent advice.