Our first investment property bought back in 2011

[Kenji Otokawa]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $135,000
Cash invested: $35,000
Sale price: $315,000

The first home I ever purchased. My buddy and I had been casually talking about getting into RE, and we finally pulled the trigger. When we saw what our mortgage would be and what the rents were going for in the neighborhood, it seemed like a no brainer ($1,500 rent vs $723 mortgage). We had no idea what we were doing, but it was hard to really screw up in 2011.

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

We wanted to get our feet wet with RE in general. A SFH in a popular neighborhood at a great price was a good starting point!

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

Our awesome real estate agent Melissa helped us find it. It was a short sale, so we had little room to negotiate with the bank. They did pay $3K our closing costs in lieu of repairs though.

How did you finance this deal?

Conventional loan. 25% down 30 years mortgage. Nothing fancy!

How did you add value to the deal?

We did very little to this property but basic cosmetic repairs and maintenance.

What was the outcome?

This home cash flowed for us nicely over 4 years. More importantly, it was in the up and coming neighborhood of Reynoldstown. We bought before the impacts of large projects were known. We ourselves did not know various developments would make property values appreciate so quickly. The home's value went from $135K to $315K in the 4 years we owned it. We sold it and rolled the profit. Perhaps we should not have sold as the home is worth more today, but we will never be upset with a win!

Lessons learned? Challenges?

We went through a lot of growing pains with our first homes. How to work with tenants and maintain your homes is not easy. As time goes by, you get better at it and learn tips and tricks to help make it better for everyone involved. We mostly learned the value of real estate and how even without the massive appreciation, it still would have been a sweet buy and hold for a long time. This home gave us confidence to do more, and we have grown significantly since 2011!