First deal in Florence AL

[Brian Lowry]

Investment Info:

Single-family residence buy & hold investment in Florence.

3/2 single family home built in 1910
Florence Alabama
Dwelling: 1,361 sq ft
Lot: 8,667 sq ft
Original listing price: $69,500
Purchase price: $62,000
Loan amount: $48,800
Rehab: jury is still out
Rent: will post when we are occupied

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

Our strategy is buy and hold with long-term rentals. We are interested in several other strategies but are starting with the one we feel most comfortable with!

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

We are out of state investors. Brian grew up in the Shoals area. We looked a lot online and drove around during holiday visits with family. When we were approved for financing and ready to give offers, we made a trip up and drove by over 100 homes. Toured over 3 with our realtor. She was our key in negotiating and continuing to make offers after returing to Texas. We bought this house based on her eyes, video footage, and photos.

How did you finance this deal?

Conventional loan with 20% down and 5.25% interest.
Our preferred purchase price was $40-60k. The only way we could find financing on this small of an amount was through a mortgage broker who then transferred the loan to another lender (Wells Fargo). We spoke to a few mortgage brokers but did not go through pre-approval until we found one we were comfortable with!

How did you add value to the deal?

Repaired and painted fencing; repainted and repaired exterior where needed; lawn care; interior paint in all bedrooms and bathrooms; small repairs within interior; added hardware to kitchen cabinets; removed insulation from crawlspace and added vapor barrier; flashing and siding repairs; removed junk from yard and exterior building...

What was the outcome?

Jury is still out on rents. We are in the middle of Covid-19 presently but the contractor is wrapping up (late Apr.). We hope to rent soon. We have signed an owner agreement with the property manager and they seem to be happy with the home.

Lessons learned? Challenges?

Like everyone says, repair costs are always more than you anticipate. We utilized spring break to travel to the house and do what we could but had to hand all undone items to our contractor.

The loan costs a lot more we thought with origination and other fees! We did not expect the extra expense that it brought to the deal.

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

We really like our real estate agent Tasha Boothe (Red Tree Realty). She had very little experience with investments but she tirelessly visited properties for us, no matter how low the purchase price and condition. She was a great negotiator.

We really like our mortgage broker Dee Dee Kilby (Integrity Mortgage). She was absoutlutely patient, professional, and an investor herself.