Second Property - Eviction, writ, sheriff - all in one deal! :)

[Jay Schultz]

Investment Info:

Single-family residence buy & hold investment in Shakopee.

Purchase price: $215,000
Cash invested: $65,000

This is a single family townhome. I bought it turnkey - with renter an everything. Ended up having to put 25% down because it was classified as a condo and not a townhome - even though it is a townhome in practice. To make matters worse, tenants stopped paying rent the month I closed. Needed to evict them...went to court, got writ, got 'em out inside of two months from the time I closed. But, lost three months rent and had to put a some cash into some unplanned fixes. Luckily, they didn't destroy the property - just left it a mess. Lots of learning.

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

I wanted to add a second property to my portfolio. My Realtor friend owned it. He moved out of state and wanted to do an exchange. So, I got it off market. It had been a good property for him and so I picked it up and inherited his tenants.

How did you finance this deal?

Conventional.

How did you add value to the deal?

Turnkey.

What was the outcome?

First three months were BAD. Tenants stopped paying. Had to evict them. Needed an extensive cleaning, new paint, and some unplanned maintenance. Good experience. Blew 1 year of future cash flow! No way to predict that on the front side.

Lessons learned? Challenges?

Have enough cash for unforeseen issues. Not great - could have put that toward my next deal. But if I would have had to sell, to cover the costs, would have been even more devastating. Now, I just hope the current tenants stay for a while and I can dig myself out of the hole over time. And it will. Just sucks.

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

Owner was my realtor and friend.