1st Rental Property Under the Belt!

[Robert Harwood]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $41,000
Cash invested: $1

Purchased my 1st rental property. 3 bedroom 1 bath. Bought the property cash, then rehabbed it. Did a cash out refi 2 months later and rented it through Section 8. Property cash flows about $250 after all expenses. Was able to pull all the money back out doing a 75% LTV commercial loan on it. BRRRR all the way!

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

It was something I could get my head around at the time. I was able to move some money over in a Qualified Retirement Plan (no tax consequences) and purchase this 1st property cash. I knew what the rates were for my local Section 8 program and wanted to get started with something that would aid in the assistance of monthly rent. The property was purchased at a good price and I felt good based on values that I could recoup the money back out using the BRRRR strategy.

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

I found this through a local investor and friend. I was fortunate because he was patient with me while going through this!

How did you finance this deal?

Purchased using retirement money and then did a cash out refi on it. Got %100 of the money back out.

How did you add value to the deal?

Renovated kitchen, adding new flooring in bedrooms and kitchen, new interior/exterior doors painted the interior walls/trim, new plumbing fixtures and a new fresh color and cut down trees and landscaped yard.

What was the outcome?

Good, renovation went well, came close to budget. Found a great tenant, and was able to get my money back out of the property. I would call it a success!

Lessons learned? Challenges?

Lessons learned:

1.Learned the basics of the Local Section 8 Program and process. (Still Learning)
2.Figured out what to add and take away from the property to help reduce maintenance issues. ie..no ceiling fans, no dishwashers, etc
3.Always get the property inspected before purchase
4. Screening tenants
5. Finding the balance of enough but not too much. You want a nice, clean, safe home but you don't want to overdo it.
6. Learning timelines for bank refinance and how it works.

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

No real estate agents were used, but I did meet a great lawyer (who has since retired) which helped close the transaction. Also used some great contractors who I had already known which helped make the process go smoother. I learned that although I can do some of the work, it's usually better to hire someone else to do it so I can focus on bigger and better things.