LTR in Panama City #3

[Yolanda Salas]

Investment Info:

Single-family residence buy & hold investment in Panama City.

Purchase price: $84,000
Cash invested: $50,000
Sale price: $180,000

Foreclosed property, initial repairs of $10000 to replace polybutylene plumbing pipes and change flooring in main living areas and kitchen. Additional repairs of $40000 to replace kitchen cabinets, new appliances, and bathroom cabinets, plus carpeting in bedrooms and screen in the back porch to get property ready for sale.

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

St Andrews is a cool community in Panama City. This was a few blocks from the main walking street of shops and restaurants. House was a 3/2 that kept going on and off the market... inspection revealed the problem so we took the challenge.

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

MLS, Fannie Mae was ready to negotiate a decent price once the plumbing issue was presented, as they prevented homebuyers from getting insurance. The property could only be a cash purchase.

How did you finance this deal?

Cash using self directed IRA funds

How did you add value to the deal?

First thing was changing out all the plumbing so property could be insurable. Once completed, new flooring and then paint. Rental income was $950 a month initially and increased to $1200. At point we decided to sell during tenant turnover, remodeled kitchen, baths, fresh carpet and paint, new hot water. Front landscape improvements.

What was the outcome?

Great cash flow - all funds went back into the IRA. Upon sale, was able to hold the mortgage thru the IRA.

Lessons learned? Challenges?

Interest received on holding the mortgage through the IRA is way better than the rental income to the IRA!