First deal townhouse

[Tim Vitale]

Investment Info:

Single-family residence buy & hold investment in Belmont.

Purchase price: $76,000
Cash invested: $6,000

3/1.5 townhouse. Rents for $875 a month. Gutted bathroom, new windows and front door. HVAC/Furnace/Water tank replaced in June 2017. Good long term hold in quickly appreciating area outside of Charlotte, NC.

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

Off market, paid for it in cash. Bought at $76 a square foot. All comps showed 90-$100 a foot however appraisal came back at an abmismal $81 a foot.

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

Looked at a flip property on MLS. Talking with the agent asked about the seller. Was informed seller was elderly looking to offload her portfolio as they came vacant. Told agent i'd be interested in buying property with tenant in place.

How did you finance this deal?

Paid cash

How did you add value to the deal?

Completed deferred maintenance and increased rent from $625/mo to $875/mo. Tenant was unhappy with landlord and deferred maintenance. I had her make a list of everything wrong with the property that she wasn't happy with. Fixed those things and she gladly paid the increased rent and signed a lease for an additional 18 months.

Lessons learned? Challenges?

Get better comps. My comps all said 90-100/ft but appraisal came in low. I thought this would make a decent BRRRR deal buying under market value. Refinancing the loan and unfortunately leaving about $23k in the deal which comes out to 8.8% CoC return on the year. When tenant leaves I will reassess market and rent rates and hopefully bump up again from $875 to $950 range which will significantly increase ROI. Good long term hold.

[Joseph J DiFranco]

FYI, appraisers report price per square foot of the comps, but they don't rely on that metric.  In residential, they will put the comps into a sales comparison grid and make dollar adjustments for individual characteristics such as condition and size.