First investment property, live in DIY renovation

[Rob King]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $285,000
Cash invested: $65,000

2/1 fixer upper condo in a lower middle class neighborhood within walking distance to a highly regarding private school, hospital, and the largest university in the state. The property was well maintained but dated and was purchased from an estate. Slowly renovated the property myself to develop into a rental income property for a long term buy and hold strategy before I had a concrete plan in mind. Excellent learning property that provides some positive cash flow and easy management.

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

This was my first property and I felt I could live ugly, fix it myself, and increase the value of the home to later sell and roll profit into a more expensive property. After making several renovations and learning more about the rental market in the neighborhood I decided I would change my strategy and make this a buy and hold property.

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

Found through a realtor and made an aggressive move since I felt the estate, located thousands of miles away, would like a quick sale which they did.

How did you finance this deal?

Traditional financing

How did you add value to the deal?

To add value to the property I compared the cost of contracting various jobs against my confidence that I could learn to do the jobs myself with multiple do-overs for less. A near total renovation including flooring, lighting, outside of wall plumbing, and paint significantly improved the livability of the home and the prospective rental income. In addition to adding income I took pains to reduce expenses such as changing building management to reduce monthly costs.

What was the outcome?

The property is an excellent rental that generates some cash flow, builds equity, and is easy to maintain. As an advocate for middle-class rentals I didn't over-improve but focused on durable and classic improvements that transition well between tenants. The property's location and improvements have lead to finding quality tenants.

Lessons learned? Challenges?

The biggest lesson learned was be open to adjusting your plan when the circumstances present a better opportunity. I did not plan on being a real estate investor but after reading the writing on the wall I changed my initial plan. I missed an opportunity early by accepting the costs of the management instead of challenging their status quo, had I committed to that fight earlier I would have saved thousands of dollars.

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

I have a realtor that is excellent, aggressive, and bluntly honest. I identified value beyond my purchase by being a member of a small community that places high value on word of mouth recommendations and trust, since doing business with her 4 of my coworkers have bought through her in as many years and I bought a second property with her. Locate an expert and add value to their business so that you can grow together.