My First Real Estate Investment

[Greg Farmer]

Investment Info:

Single-family residence buy & hold investment in Dallas.

Purchase price: $163,000
Cash invested: $8,000

I originally bought this home as an owner-occupy with a "Home Ready" mortage which allows 3% down. I believe all-in with closing costs (seller covered some of mine), I put about $8K in at closing. I lived there for a year, house hacked for 6 months of that year with a roommate, and did some minor cosmetic work myself. I also converted it from a 2 bed 2 bath, to a 3 bed 2 bath. It now cash flows modestly at about $100/month. I am planning on painting it more modern colors, furnishing it, and marketing it as a corporate rental or month to month furnisehd rental once the current tenants leave. I'm planning to put about $5K into it at that time with painting, minor touch ups, and furniture, and start cash flowing $500-700 per month (very conservative estimate).

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

I was brand new to real estate, and I originally just wanted something in a cool neighborhood that I could afford. My Realtor encouraged me to get something that was also "rentable", and he even recommended house hacking with a roommate. That's what I did, and I've been hooked on real estate since!

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

I found it listed on Zillow. My Realtor handled all negotiations, and I followed his advice since I was brand new. My Realtor was able to get them to put $3K towards closing, since they weren't interested in lowering the price much, and I needed all the help I could get with cash to close.

How did you finance this deal?

Home Ready mortgage - 3% down.

How did you add value to the deal?

I did minor cosmetic updates to both bathrooms, and I converted a second living room into a 3rd bedroom.

What was the outcome?

Currently, I am renting to Southern Methodist University Gradute students. Cash flow - $100/month.

Lessons learned? Challenges?

Real estate can be fun! Don't sweat the small stuff in deals and don't stress too much about the negotiation process. Also, find a local lender. My lender was remote, and I received absolutely horrible service. My Realtor basically saved the day a couple times when closing kept getting pushed back due to simple errors in paperwork by the lender.

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

A Realtor named Blake Phillips in Dallas TX - Great guy! I recommend!