First property bought

[Jordan Calaway]

Investment Info:

Townhouse buy & hold investment in Valencia.

Purchase price: $506,000
Sale price: $252,000

First house at 26, got into a terrible loan and short sold to get out of it. It was an expensive lesson but I gained tremendous knowledge and experience about real estate, my self and life in general.

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

At 26 I was ready to buy my first house as primary residence with plans of eventually buying a second investment.

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

2006 being about the height of the market, I looked at 79 houses. Places that needed over $100K of rehab before I could even spend the night in them. At last the 79th home was the winner. Brand NEW home that had fallen out of escrow from the original buyer and the builder could not close the development and open the new one until this house was sold. It was next door to my best friend's house, who was also my agent.

How did you finance this deal?

5 year ARM with a $100k down, which was a loan from my mom.

How did you add value to the deal?

I walked into equity of almost $200k to do the builders circumstance.

What was the outcome?

My plan was to refinance ASAP which was a year at the time, get a locked in interest rate and pay back my mom. Well the market had other plans and by the time refinance came around I was under water. The neighborhood ended up with the highest foreclosure rate in Los Angeles County at the time.

Lessons learned? Challenges?

I learned you don't know what you don't know. I also learned waling through the loan process, don't let ANYONE influence you what you can afford. Only you can be that judge. It was a great experience learning how the system worked and can collapse. I also looked at the property as an investment but being young and naive, treated it like falling stock and dumped it to an investor. It worked out in the end, they rented to back to me for a great deal since they got a great purchase price.