This is a single family house with 750 sq ft and was built in 1904. It contains 2 bedrooms and 1 bathroom, full unfinished basement, detached one-car garage.

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

I wanted another property and I wanted to do this one without a partner, like my first. I wanted to find a house to buy and rent instead of another multi-unit.

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

This was in 2016. I had an agent who is a close friend and a local investor. This was an empty house that the previous owner had rented out, The owner had moved out of state and wanted to unload it. 6 months before the sale they were asking $85,900 for the property but it did not sell, The seller continuously lowered the asking price and I became aware of it when it was $69,900. My agent negotiated the sale for $57,500 all cash.

How did you finance this deal?

I used obtained a HELOC on my primary residence. It is interest only for 10 years with an adjustable rate.

How did you add value to the deal?

I built a new garage, new driveway, painted inside, painted outside, minor rehab issues. I began paying off the HELOC as soon as possible (extra payments) but ran into some issues here and there that needed me to keep the HELOC close to maxed out. After knocking $10,000 off of the HELOC I had a renter leave a unit from my first property and I needed to do a complete rehab there.

What was the outcome?

I still hold and rent it out. No plans to sell anytime soon. I just (2 days ago) refinanced this, and my first, property with the intent to BRRRR. The house was appraised at $121,000 allowing me to pull out just under $80k (-$55k to pay off HELOC). I will still have positive cash-flow.

Lessons learned? Challenges?

1. Know what is required by the city. The garage was falling down and I planned on just pulling it down with my truck and leaving a parking slab for renters. I later learned from the city that the property is zoned for a garage. $27K later I have a beautiful new garage and driveway that the tenants love. Expensive lesson that I wont forget.
2. Pay attention to rent increases in the area. This still holds. I had planned on raising rent but with the pandemic, I decided to wait a year.

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

Yes. My agent is a friend and life-long property investor. This is the same person from my 2nd deal. I have learned a lot from him and still learn.

1 Vote

3 Replies

Jump to Last Reply

3rd deal for the win!

Most Popular Reply