Buy, Rehab, Rent and Re-try on an First Investment

[Account Closed]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $210,000
Cash invested: $67,500

First investment property! 6.35% CoC ROI which is okay all things considered. Just like everyone else, I learned a ton about rental property investing which will prove to be invaluable in my future purchases.

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

Found it off the MLS and I let my Realtor negotiate the deal for me. I do not know how many other offers were on this property, but I'm curious if I got the best price.

How did you finance this deal?

Saving and living below my means.

How did you add value to the deal?

The contract was "as-is" with the previous owners paying for one year of home warranty insurance. After closing, I ripped up the carpets, had the kitchen, living room, and master bedroom painted along with the cabinets. Then installed new vinyl floors, fixed broken plumbing in the master bedroom, installed new fixtures, brand new appliances and resurfaced the Formica countertops. All total, I spent $7,000 on rehab costs, did 90% of the labor myself and learned a lot about home maintenance.

What was the outcome?

With all the rehab complete, the house looks brand new and is managed by a property management company for $1600 a month, PMI is $920. By May 2020 I was hoping to have the property appraised and do a cash-out refinance but the current market conditions are not conducive to that strategy.

Lessons learned? Challenges?

Emotions got the best of me. Plain and simple. This house was in my price range, but was not big enough to provide the kind of ROI that I needed. I really liked the floor plan and the large backyard so I did next to zero due diligence. Had I run it through the Bigger Pockets Buy and Hold Calculator, I would have had an idea of the right purchase price to make this a better investment and had the confidence to walk away at the wrong price.