396 Leeville Pike Lebanon, TN Rental

[Brian Benton]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $123,000

We originally bought this as a flip. As we neared completion of the flip, we realized the property was zoned R2 giving us an opportunity for a sub-divide. We bought the house back from our flip entity at a slight loss and immediately got a renter in there. We have began the site work and will begin the new construction in a few weeks. We are looking a significant margins on the new construction flip which will also help us see some value increase on the rental house.

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

Originally, this was a simple flip. Purchased for $80k and put about $40k total in the deal with holding costs, closing, rehab, etc. Margins weren't great but this deal would have brought $160k all day, however we bought it back as a rental for $123k as described above.

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

This was presented to me from a local wholesaler. My wife is a professor at the private university a block over, which means we knew the area pretty well.

How did you finance this deal?

Local bank (southern bank) loaned us 80% of after rehab appraised value with zero $$ down. Its at 6% with a 20 year amortization on a 10 year balloon.

How did you add value to the deal?

The house had sat vacant for 8 years with several roofing leaks. The time and money we poured into it increased its value significantly. The house we will build next door to it will increase it that much more.

What was the outcome?

We got a renter in right away which ended up being friends of my wife's. The new build starts in a few weeks.

Lessons learned? Challenges?

Originally when negotiating the deal as a flip, I was at $70k. The wholesaler talked me up to $80k which gave me tight margins. I really should have stuck to my guns or met in the middle. But all in all, still a decent deal.

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

I'm a licensed agent, so I handled everything myself.