17 yr. Buy & Hold - SF Home turned Rental Property

[John P Hillmer]

Investment Info:

Single-family residence buy & hold investment in Appleton.

Purchase price: $72,500
Cash invested: $12,000
Sale price: $99,800

Lived in this home as renter, free of rent to help Engineering Manager out with re-furb. Finished partial re-furb and was asked if I wanted to buy. Negotiated and purchased for $72.5K. Lived in home for 5 years before moving out of state. Finished refurbishing, and spent $12,000. $8,000 of which was paid for by insurance, due to pipe burst in winter. Sold after 17 yrs. of ownership. 11 yrs. of positive monthly cash flow. Net profit of $44,200 at time of sale. First and only rental.

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

Out of necessity, as I needed a place to live, but upon receiving a promotion with a new company out of state, the new company would not purchase my home, so once again, out of necessity, I learned to be a landlord on my own, but then got a Property Management company, which was a good thing. Again, profitable investment for 11 yrs as a rental. Property values improved, and I sold in 2018 with a very high market value.

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

Purchased property as described above, and sold through a local Century 21 Realtor.

How did you finance this deal?

Bank loan, and then re-financed.

How did you add value to the deal?

Helped refurbish from 2000-2001 when I purchased it. Then continued to refurbish until I moved out and turned it into a rental. Second round of refurbish => Burst pipe in winter, destroying much of the home. ServePro refurbished - paid for by insurance company (~$8,000), and I worked with ServePro to add ~$4,000 to some additional improvements that I either wanted, or were not covered by the insurance company. It very much increased the value as a rental, and also on the selling end in 2018.

What was the outcome?

11 yrs as a cash positive investment. Sold for much more than I purchased. Market was good.

Lessons learned? Challenges?

I learned that I do not like mortgages. I have moved around the US, and worked for various companies, I've owned and sold 10 homes, refinanced 5 times on various homes, some twice; and the banks make a killing off mortgages. This was the main reason that I profited minimally from this investment, specifically as a rental property - as the loan on the property dug deep into my profits over 17 yrs of ownership. This goes for all 10 of my homes.

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

None that I would recommend.