First Rental Property

[Drummond Bryant]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $25,000
Cash invested: $15,000

3 bedroom 1 1/2 bath. Attached single car garage. Full basement. Nice corner lot.

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

I bought this property not as an investment necessarily. My goal was to provide my mom and step dad with a nice home they could enjoy in their senior years. And not have to deal with the slum lords that they had been renting from. So now they rent from us and all their utilities are included.

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

I found this property with the assistance of a real estate agent. It was a hud property so we offered asking price because the area is very competitive.

How did you finance this deal?

Paid cash for the property by borrowing the money from a 401k. The advantage was as long as we paid it back in full the withdrawal was not taxed as income and no penalty fee. The interest rate was like 4% but we were simply paying back ourselves! Win/Win!

How did you add value to the deal?

By rehabbing the property. I did almost all the work myself so I save quite a bit of money. We later used the equity in the home to finance the next property. It appraised for $67,000.

What was the outcome?

Mom and Stepmom are nice and comfy and my wife and I have a piece of mind that they are well. And it sparked my interest in being landlord.

Lessons learned? Challenges?

One of the biggest lessons learned from this deal was getting it to pass inspection. I learned a lot about what to look for in the next property. I am hands on, so I increased my knowledge and skill level with repairs immensely.

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

I had an agent.