Locust Point Buy and Hold

[Alex Kukich]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $229,000
Cash invested: $79,000

Rent ready single family, just needed some paint and slight structural damage. Cash outlay was a little higher than I'd hoped but the ~$80K includes 25% down, closing costs, and construction/rehab costs.

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

It's 2 blocks away from where I live, and I know the market/neighborhood. It's a great street, good, wide property, and the long term resell value is high, plus it has the ability to cash flow very well for a long time.

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

Realtor brought it to me.

How did you finance this deal?

Conventional loan.

How did you add value to the deal?

There was some structural damage and termite damage that scared some people away. The termite damage caused the structural damage and with the house being 97% brick, I knew it wouldn't be much of an issue. So we ripped the rot out, redid the support corner we needed, and took off and replaced a deck. Otherwise it was patch and paint and a few new light fixtures. Had to get the cat pee smell out too :-)

What was the outcome?

It rents at $1900 a month, COVID-19 cost me $100 a month in rent as my timelines for renting got a little screwy with the market. Mortgage/taxes/insurance is $1300 a month, so cash flowing at $600 a month, or $7200 for the year, so it's close to a 10% Cash on Cash return which is a great number for me considering the proximity to my primary residence and the low maintenance rental that this building is and tenant is.

Lessons learned? Challenges?

I paid a little more for the rehab than I wanted to because I thought it would give me an extra month of rent. That didn't work out. I will err on the side of caution moving forward ensuring I keep the work cheaper instead of racing to MAYBE get a renter in when I'm ready versus the market being ready.

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

Bryan Schafer