Single Family House

[Chris Hale]

Investment Info:

Single-family residence buy & hold investment in Texas City.

Purchase price: $94,000
Cash invested: $13,000

Single Family home that I purchased from the pre-foreclosure list.

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

Decided I wanted to begin generating my own leads and quit paying the wholesaler.

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

I purchased a pre-foreclosure list and sent out direct mail to the areas of interest to me.

How did you finance this deal?

I financed the purchase through a Hard Money loan because it needed to be closed very quickly. Refinanced loan to a thirty year mortgage.

How did you add value to the deal?

I did not add value to the home at this time. I allowed the seller to stay there for a little while to "get it together". This was a mistake.

What was the outcome?

Because I allowed the seller to stay in the home (wrote a 3 month lease) and set a rental rate without due diligence, my rental rate was less than the mortgage. I got stuck in the hard money for several months as I couldn't refinance with rent lower than the mortgage. Once the seller left I was able to do the minimal rehab the house needed and rent at market rate. Was then able to refinance and get a positive cash flow.

Lessons learned? Challenges?

I learned to talk to the bank and know what the balance on the house is before making a deal. This is my first attempt at buying from a list and I trusted the numbers on the list too much. I was not aware of possible arrears that might owed. I made decisions, rent, money to seller (I wanted to help them out - and I did but ...) on incomplete information. I lost money for several months. It was still a good deal, I just should have made different decisions like charge a higher rent.

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

Love my realtor. Its this deal that I found the realtor for my team!!