My first, partially intentional investment

[Peter Jaglom]

Investment Info:

Single-family residence buy & hold investment in Washington.

Purchase price: $595,000

Purchased as my primary residence with a VA loan. I house hacked it for one year, then converted the basement to a separate apartment (actually just made it legal and got the C of O as it had been partially converted by the previous owners). Then rented out both units separately for 2.5 years on long-term leases. We moved back into it in spring 2017 and have airbnb'ed the basement since late 2018.

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

Ever since reading Rich Dad, Poor Dad sometime around 2006-2008, I've wanted to invest in real estate. After moving around a lot including a long stint in Japan, this was my first opportunity to buy some property in the states and I jumped at it.

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

I worked with a realtor in DC and negotiated through him.

How did you finance this deal?

I financed this deal with a VA loan. Due to some seller coverage of closing costs, I actually received a check back for about $1500 at closing.

How did you add value to the deal?

Initially I replaced the A/C system, hot water heater, vinyl siding on part of the house. The next big update came about a year later when I rehabbed the basement, installing new counters, cabinets, microwave, tile flooring, an emergency escape window, and bringing the space up to code for the Certificate of Occupancy inspection. When I moved back into the house in the spring of 2017, we replaced the floors throughout the upstairs unit and repainted the interior of the house.

What was the outcome?

We are currently living in the house and airbnb the basement for additional cash flow.

Lessons learned? Challenges?

Learned the basics of how a real estate transaction works, and learned about bad contractors and why you shouldn't complete payment until all the work is finished and inspected. Finally, I learned about the wide quality spread of tenants with the best possible tenant in the basement (who paid 2 weeks early every month and made improvements!) for the first year to horrible hoarders with cats. Learned my lesson on pets early - never again!