First buy and hold property

[Thomas Klein]

Investment Info:

Single-family residence buy & hold investment in Margate.

Purchase price: $30,000
Cash invested: $15,000

The property is a 2/1 (half duplex) with a large Florida room which can be used as a third bedroom. The building has my half and another half owned by a separate family. No garage or carport, just a one car driveway. Has a "half" of a backyard as everything with this property is half.

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

My family member was talking about selling it and I asked if I could possibly purchase it from them.

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

I was able to purchase this property from a family member. The property was in desperate need of being completely rehabbed. At the time of purchase it was currently tenant occupied by friends of the family member from which I purchased it from. I decided to leave them in the property to accumulate some principal pay down and see how this rental process was going to work.

How did you finance this deal?

I did seller financing for three years with a lump sum due at the end of three years.

How did you add value to the deal?

Once the current tenants were asked to leave and finally left, I got to work. I basically just had to do a deep deep cleaning and then painted everything, including the kitchen cabinets. By just doing that it looked and felt very clean and showed well.

What was the outcome?

I was able to up the rent from $750 to $1000.

Lessons learned? Challenges?

First time ever dealing with buying a property and tenants. I learned that you can not be "buddy buddy" with your tenants. I learned that you have to stick to what is in writing and make sure everything is documented! I learned that you do not take the first person that pays six months of his rent up front and in cash without being vetted (the United States Marshal Services ended up coming to look for my tenant). Must do an appropriate tenant screening!!

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

Fortunately enough I had my mom assist in the transaction. My mom had been a Realtor in Broward County for about 20 years at the time. Thank you to Shirley Klein aka mom! She is still active as a licensed Realtor today.