First Property Investment

[Brady Allen]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $74,000
Cash invested: $60,000
Sale price: $185,000

This home was a fix and flip made by my wife and I. The house was a previous family members and was purcahased from the bank that the previous family member had the mortgage through. The house had several animals living in it at the time of purchase and had no maintenance done to it whatsoever. Trash, animal (leftovers), and damage needed to be fixed, cleaned, removed, and cleaned again. Once all cleaning was completed and renovations completed, we were left with a beutiful 1900 sq ft home.

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

Home was at a purchase price of over 100k under market value and knowing it needed a little sweat equity and renovations, it could become an amazing first investment.

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

Talked to bank over phone and got fees from previous owner waved and was able to pay of mortgage.

How did you finance this deal?

Had my parents get a HELOC using their own personal home to purchase investment house from bank. After purchasing home we cleaned house and made small renovations to get home appraised at 165k. My parents then sold the house to the wife and I for 105k. We used 105k to pay parents back and left over money to hire contractor to redo kitchen, laundry room, & both bathrooms. Had home re financed and appraised for 185k

How did you add value to the deal?

A amazing way of using the no and low money down method as well as BRRRR method

What was the outcome?

A great first home for the wife and i letting us use the equity from our first investment to find other homes we could find for rental investments.

Lessons learned? Challenges?

Learned a lot during small renos.

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

Worked with no real estate agents since we knew of property issues and mortgage from family.

[Brady Allen]

Originally posted by @Gary C Jones:

I love it! Congrats! So, your parents purchased the home for $74k using a HELOC on their home.

1. How long after the purchase and your sweat equity did the appraisal of $165k come in?   

2. Your folks sold you guys the house for $105k.  Did you use a traditional loan for this?  If so, what were the terms?

3. Did your folks refi for the $165k to pay off the $74k?  Then, did they sell to you guys for the $105k, then you all refi for the $185k?  -a bit confused on how that all went.  

Thanks!

Gary C Jones, once home was initially purchased it took a little over a month for all the work on the house to be done for the first appraisal. This work like i stated before included yard work( removing over grown trees, mowing, burning excess grass from never being mowed), cleaning house ( we went through 2 roll off dumpsters to remove all trash and animal waste, removed and replaced floor, replaced doors, replaced trim, replaced sheetrock, and painted entire interior of house. My folks sold us the house for 105k so we could use the difference between initial purchase price to pay them back and selling price to get contractors to do renovations. After renovations and home in my name we had bank appraise house again to get a final home value of 185k. NO REFINANCING With the 80k in equity (185k-105k) we are able to borrow against this property to find other homes for rental purchases