My first investment property has accepted my offer!

[Tiffany Drahonovsky]

Investment Info:

Single-family residence buy & hold investment in Milwaukee.

Purchase price: $52,000
Cash invested: $13,000

Verbal on my first investment property. Cute little turnkey single family with a happy tenant who takes pride in the home. Eager to see how this first experience works out, it looks good initially. We are focused on smaller single family homes to keep our risk and exposure for major improvements/repairs low as we just get into investing.
We will be looking to upgrade to a single fam in Franklin, WI in the spring (for ourselves) and rent out my current condo. Then step 3 is our first investment property out of state (FL).

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

I don't have as much for reserves as I would like to feel safe, so when we found this cute little home, and calculated the cost of major repairs (if/when that would happen) we determined that with no immediate improvements needed and a tenant in place, our cost and risk was low to get started. Financing cash was easier at this price point, too. Had struggled with the challenged areas of our city and where we wanted to invest as well. Highly segregated city, some areas very dangerous.

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

We found this deal on Zillow, however it was being sold as part of a portfolio by a wholesaler. He liked that my partner and I committed to doing right by the tenant (she wants to stay) and we see that as the icing on the deal's cake. She takes care of the place, it was spic and span and she wants to paint, too. We had to move fast, 2 other offers, but went with us, other investors were all about squeezing every dollar and not caring about wholesaler promise to tenant. It's a people business.

How did you finance this deal?

Cash down from my HELOC. Went to Dad for cash funding to win this deal. He took a HELOC on his paid condo and I will be paying that with the rent proceeds.

How did you add value to the deal?

No adding value needed, tenant wants to paint and stay. Our value is in keeping the tenant and strong cash flow. Minimizing turnover cost.

What was the outcome?

TBD, we close in Jan 2020.

Lessons learned? Challenges?

be ready with funding options. I had pre-approval for a traditional loan, but seller wanted to close fast.
Care about the people involved, wholesaler promised tenant he would sell the property to investors who would consider keeping tenant in place. Integrity still matters. Make nice with the tenant if you have the opportunity when inspecting property.

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

Pending all goes well, I'm happy to share the wholesaler who assisted in this assignment of contract.