First Rental Property for my wife & I

[Brad Crumpton]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $79,500
Rehab Costs: $8,500

ARV: $120,000

Cash-out Refi: $90,000

Bought an older home in a small town near us.  New paint, floors, kitchen counters, some subfloor repair, landscaping, foundation leveling, and clean-up, and it turned out great.   

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

My old boss retired at 55 with around 40 properties around town.  Hasn't touched his 401k or pension, and goes on a vacation every month, drives a nice car, and plays a lot of golf.  

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

MLS - it was listed too high and had been on the market a long time so we lowballed and pushed them down $15k. I need to improve upon finding deals outside of MLS to give myself more margin in the future.

How did you finance this deal?

$40k 401k loan, $30k savings, and borrowed $20k from friends that was paid back when the refi went through.

How did you add value to the deal?

Rehab - a month straight of working 5am to noon, leaving and working noon til midnight on the house.  

What was the outcome?

Got a renter in the day after we finished up, and they've been mostly easy to work with, outside of adding a dog without requesting permission or putting it on the lease. But I've seen facebook pics and the house looks to be in mint condition, so I'm not sweating it.

They're actually leaving the lease early because of the virus situation (daughter had to come home and live with them, so their bed is in the dining room and it's just not enough space), but we got another renter planned for July 3, and they're leaving July 1, so everyone is in decent shape. I know they'd like to be out sooner, but that was the best we could do.  

Given how quickly we've found renters, I think it's possible we're renting too cheap, but we've got good renters, good cash flow, the house is taken care of well, and very little down time, so I'm sticking with the "grateful instead of greedy" approach.

Lessons learned? Challenges?

Stop depending on MLS to get deals.

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

Agent - Allyson McClurg in Rockwall - fantastic in all respects

Mortgage broker - deal went south with my first lender, but Jerry Padilla stepped in and handled the refi and it went really smoothly - would highly recommend.