First Investment Property Purchase

[PJ Scalf]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $189,000
Cash invested: $40,000

This is my first rental purchase. We currently have a tenant with a 12 month lease agreement. So far the experience has been positive. This will be the test to see if this is really something I have the time and desire to do as I enjoy my day-job.

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

It was a newly listed property that we caught at the right time in the market. The North Texas market is exploding and property value has been increasing rapidly. We caught the market in a lull and are hoping that after holding for a few years we may be able to cash out and upgrade, or diversify, our real estate investments.

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

My wife happened to be driving by the property as the agent was putting the for sale sign in the yard. We negotiated based on the rate of return we were hoping to receive more than anything else. We ended up getting the house for the original price we offered.

How did you finance this deal?

We went through a local bank, First United Bank. Through a series of events we came into some money by cashing out the equity of our current home and using some of those funds to purchase this investment property. As I see it, I would rather utilize that equity to help me build more wealth rather than letting it sit there and not earn any return.

How did you add value to the deal?

I am not sure I did. I was just able to get the deal closed quickly since I had just refinanced my personal residence the bank had many of the documents they needed.

What was the outcome?

We closed the deal within six weeks. Two weeks later we had a tenant and are currently collecting rent netting roughly $650/month.

Lessons learned? Challenges?

I learned the value of asking for what you want. Don't be afraid to make an offer that you doubt will be accepted, because you never know.

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

I worked with Caitlin Skidmore - who more than earned her commission on this. In the midst of my option period I had a knee surgery and she handled all the things I was unable to do, such as extending option a couple of days, so we could complete everything and get comfortable with the minor issues we were walking into.