First home turned into Buy and Hold

[Katelyn B.]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $142,000
Cash invested: $10,000

Purchased this home in 2012 as our primary residence and lived in it until 2019 when it became a buy and hold rental.

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

This home is located in a redeveloping downtown area that has seen a lot of growth the past few years.

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

Complete renovation purchased from our contractor who owned the property and worked on to live in himself. He was working on a separate deal for a someone we knew so this property came up from letting him know we were looking for a downtown property. After we agreed to purchase, we worked together to select finishes that we both agreed on in case we ended up not purchasing after completion.

How did you finance this deal?

Conventional loan, 5% down.

How did you add value to the deal?

This was our first home so the budget was very tight starting out. There were unforeseen issues on both our end and the contractor's (the home was in awful shape and over 100 years old) but we ended up working well together and holding up our end of the agreement even though both sides weren't able to have everything they wanted at the time of purchase. Over time, we cleaned up the yard, landscaped, added a privacy fence and leveled and sodded the yard.

What was the outcome?

We were able to live in a home that we loved, in an area that we loved, for 7 years and then turn it into a higher end buy and hold. We have also used the equity (heloc) to invest in more properties-appraisal of $208,000 in 2019.

Lessons learned? Challenges?

This is the home that sparked our interest in real estate investing. I feel so fortunate to have experienced the growth that we have and that we've been able to see first hand how well it works. Only wishing we would have gotten started sooner! There have been and will be issues (hvac trouble, improper installation of flashing on roof causing water damage, lots of manual labor from my husband to save $, fear of the unknowns) but the benefits have outweighed the challenges for sure.