Project house for a buy and hold

[Elaine Mejia]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $150,000
Cash invested: $17,000

3 bed, 2 baths 1800 sqft 1.25 acres, renovated into 4 bed, 2.5 bath

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

We had just sold a property and wanted to get into another property that was a project for both my husband and I to work on to hone skills while working on a project together.

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

We had been looking at projects for several months while living in on-post housing, we didn't want to purchase a property for the sake of purchasing. We contacted a realtor to look at a couple houses after finding some that fit our criteria, we liked one and she mentioned that she had just received the keys for another property earlier that day.

How did you finance this deal?

100% VA Home loan and 100% cash for the rehab, we offered VA home loan and the seller was going as-is. We clarified with the realtor that the VA may require some repairs in the event that there was water damage or something that would make the house unlivable upon closing. The seller agreed as long as we agreed to the asking price, there was a patch needed in the roof and a door had to be replaced.

How did you add value to the deal?

Between the patch in the roof and the door, we also negotiated for the seller to finish the rehabs on the bathrooms. We did end up having to do some painting and sealing on the new tub and shower, but those items the seller had to do saved us thousands.

What was the outcome?

The project is still ongoing as the property was vacant for almost 3 years. The roof will have to be replaced in a couple years, but we factored that into the cash calculations. The land has been cleaned up, trees removed, and grass seeded. There are two 10X20 ft shed on the property that are in good condition but needed cleaning and paint. New floors, completely repainted, new appliances, half bath added, and electrical updated.

Lessons learned? Challenges?

We're continuing to learn skills to renovate properties. I am amaze at the difference a property makes when the land is cleared up- that alone adds curb appeal and shifts the perspective. The biggest challenge was closing as COVID-19 was hitting the population and beginning renovations on the property while preparing to reside in it and both of us deploying in the next year. The project is going to take longer but the plan is to purchase another property at the two year mark.

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

We started the purchase with a new realtor and her mentor ended up taking over, there was miscommunication between the realtor and the seller as to what agreeing to the VA loan meant to him and that caused him to sour which in turn caused us to have to repair and inspect the work that he had completed.