Davenport Buy and hold #1

[Account Closed]

Investment Info:

Single-family residence buy & hold investment in Davenport.

Purchase price: $105,000
Cash invested: $5,000

My first property is a SFR in Davenport Iowa. It is in a class B neighborhood. The previous owners kept it in good shape. New roof and siding in 2014.

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

I decided to buy this property because it is a perfect rental home. It is sound structurally. It could use a little updating but could be rented after only a coat of paint inside. So I have the option of renting immediately or replacing carpet first.

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

My real estate agent saw this and texted me within hours of it hitting the market. Asking price was $119000 but they accepted $105000. They did not want to pay utilities over the winter and knew it could use some new floor coverings so they didn't haggle much after my first offer.

How did you finance this deal?

My bank financed 100% while taking a lien against another property I own for $20000.

How did you add value to the deal?

I will paint the inside and eventually replace the carpeting. There is room in the basement to add another bedroom or two.

What was the outcome?

I have yet to close on this property but expect it to cash flow $400 or more.

Lessons learned? Challenges?

There was an open house scheduled for Sunday. My agent got me in on Saturday to see it because she was an investor and recognized the potential of this property. I made the offer before the open house started and completed negotiations before the open house ended. Partner with an agent that understands the investor mind.

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

I worked with Marian Stallings of Exit Realty. She was on the ball watching out for my interests. She was the agent holding an open house for the first property I viewed. I told her my situation and she started watching listings for me. Without her I would not have even looked at this property. When I evaluated the property for potential rent my estimate was only $900. There was not enough cash flow for that rent. She showed me that it is more like $1300 based on similar properties.