Our First Investment...Rental with Equity

[John Street]

Investment Info:

Single-family residence buy & hold investment in Birmingham.

Purchase price: $60,000
Cash invested: $10,000

This is an investment property in the Roebuck Springs area of Birmingham, AL that cash flows well. It is a 4x2 with garage and unfinished basement in a neighborhood that is seeing slow but consistent gentrification.

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

We originally bought this home for my mother in law to live. When she passed away earlier this year we thought about flipping it but have decided to keep it and rent it out. We are going to use the equity to buy our next rental for cash. Basically we are planning on using the BRRRR strategy with this investment.

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

I had family who were selling the house as is just to get it out of their hair. We bought it and put some work in it for my mother in law.

How did you finance this deal?

We used an FHA loan with 3.5% down.

How did you add value to the deal?

We have painted, cleaned carpets, had the home inspected, added inexpensive landscaping for curb appeal, and professionally cleaned it for the renter.

What was the outcome?

We have a renter moving in November 1st. His rent will cover the mortgage plus 375.00 monthly.

Lessons learned? Challenges?

We have learned what things we can or want to do ourselves versus what rehab projects to hire out.

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

I didn't have my real estate license when we purchased this home, but now I do and will represent our real estate purchases in the future.