My most recent investment is a single-family home I purchased a few blocks away from my own residence. I bought below value and rehabbed it by re-stuccoing some exterior, painting, adding plumbing for a dishwasher, replacing a window, and adding wood-look vinyl tile to the kitchen and bathroom. Back and front yards were landscaped lightly, and the mulch and small plants made a big difference; a tree was removed that had the potential to fall or to block sewer lines.In the kitchen, granite and a quartz composite sink, as well as new hardware, were added. Modifications to the laundry area and some kitchen cabinets made the classic (read: old vintage!) house more modern while retaining its charm.

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

I have had two rentals before and had divested and cashed out. Because Bakersfield has such a hot rental market, it made sense to begin investing again in rental properties.

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

As a Realtor, I am searching daily for good deals on homes intended for owner occupancy, and for flips and buy-and-holds. So I found an under-market property on a great street and negotiated an offer that would win over other offers, but keep the price low enough to rehab.

How did you finance this deal?

I used conventional financing and put 20% down

How did you add value to the deal?

I decided to use premium materials since I was buying and holding, but kept costs down by using a contractor experienced in flipping.

What was the outcome?

I took my time to find the ideal renters and now have the home rented to a wonderful family. After mortgage, taxes, and insurance, I have a cash flow of about 240 a month. I will probably refinance eventually, and either take out cash to go again or change to a 15 year loan for faster repayment.

Lessons learned? Challenges?

I rehabbed this home more extensively than I had my 2 past rentals. I didn't initially take into account extras like cutting into cupboard area to plumb the dishwasher, adding sprinklers, or turning a doorway into a wall to improve the laundry room. The newer roof, AC, and the block back yard wall were attractive features and will save money on future repairs. I carefully chose the street as well, since in this neighborhood the overall quality of each street varies.

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

I am an agent myself, so I negotiated the offer. I was qualified for both a hard money loan (in case I decided to flip) and a conventional loan. This kept my options open. Hard money or cash is ideal for flipping, but can cost more (hard money loans) in interest/points than a conventional loan.