Buy and hold and a lot of luck

[Chris Prichard]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $24,000
Cash invested: $60,000

A once-dicey neighborhood turns into the hottest thing going. I lucked out--but 14 years of buy and hold was the best strategy here.

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

Read "Rich Dad, Poor Dad," by Robert Kiyosaki just before getting laid off, wanted to try investing in real estate so rolled over my 401k into a self-directed IRA.

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

On the MLS in a neighborhood that at the time no one would touch. It reminded me of a similar neighborhood where I grew up that became trendy/all the rage. In retrospect, doing things like this purely on gut instinct isn't recommended. But in this case, I was very lucky. The bank may have knocked 500 off the asking price. They weren't super interested in negotiating.

How did you finance this deal?

401k rollover after I got laid off so funded it with a self-directed IRA.

How did you add value to the deal?

Paying cash for improvements as rent rolls in. New roof, HVAC, windows, refinished hardwoods, tile in bath, paint.

What was the outcome?

Things are looking good. My houses on this block used to be the two best--and they were pretty bad at first. Think dead rats in the walls and leaky roofs and more. Now they are the two worst. Think no high end fixtures or professional landscaping. Two houses this year on the same block listed north of 450k. One sold within a month. The other just listed this week. It sold last spring for 65k. Gutted/completely renovated, it listed today at 479k. Unbelievable.

Lessons learned? Challenges?

Hire bona fide contractors. Get three estimates. Always. Screen tenants, criminal, employer and background checks. Always. In the early days, challenges included keeping drug addicts and prostitutes away from my contractors. Stolen copper, electrical wiring in the early days. Now it's keeping investors away from my tenants. Learn the numbers to back up your hunches.

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

Scott Alsabrook with Brik realty is a go getter real estate agent. Newer to the field but works hard, is personable, wants to connect with investors.