First Investment Property for New Investor

[Jae Green]

Investment Info:

Single-family residence buy & hold investment in Kalamazoo.

Purchase price: $87,000
Cash invested: $4,350

I apologize if anyone is seeing this post again as I did an introduction post on this in a different thread on the forum:

Current "live-in" rehab 2Bed 1Bath with unfinished basement that has space for additional 1Bed and 1Bath. Currently working on collecting bids from contractors to start the rehab. Plan is to advertise to upperclassmen university students, post-graduate studies students, and student medical professionals with above average rentals.

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

My wife and I were selling our first home and wanted to take the opportunity to use our next home purchase and turn it into a cash flowing investment property. I am a medical professional that had to rent an apartment around the area about 12 years ago and my wife was unfortunate enough to suffer through that time of my life with me. We want to provide students going into the medical profession with quality rentals that are above the average apartment unit.

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

We found this deal on the MLS. I was able to use the BP calculator to run the data and was able to negotiate the seller (who lived out of state) down to $87k from $105k. The MLS listing had less than 5 pictures so it did not give anyone a good idea of what it was like on the inside. I think this was one of the main reasons we we able to get this deal without any competition.

How did you finance this deal?

We were able to use a conventional 30yr fixed mortgage from a local credit union at 3.75% with 5% downpayment

How did you add value to the deal?

We removed an ugly homemade green house from the otherwise nice-sized back yard. We are planning to add additional studio-type bedroom in the basement as well as a full bathroom. We are going to open up the main floor and update the kitchen and flooring.

What was the outcome?

stay tuned...

Lessons learned? Challenges?

So far, we are learning that finding contractors is more of a challenge than we had anticipated. Either we can't get any response from our initial inquiries (including emails and phone-calls), bids come in high from the more well-known name companies, or we are ignored after we are sent the bid (unable to get any sort of response when we reach out to try and get a contract signed). Any insight or advice is welcomed!

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

We worked with a very good real estate agent that was a recommendation from a co-worker. She was trustworthy, realistic, and had our best interest. I am not too sure if she deals with many investors but we knew what we were looking for as far as a property we could add value to.