First Buy and Hold with beginner luck

[Graziano Casale]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $127,000
Cash invested: $28,717

Beginner luck at full speed! Found this property on the MLS, got a motivated seller that turned in a high return situation.

Good things happen when you take action

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

This property met my criteria: SFH, B neighborhood, 1% rule

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

I found it on the MLS.
It was listed on 08/28 for $145k, and on 9/13 it dropped the price at $140k. When I saw the price drop I started my due diligence thinking of a motivated seller.
We started with a low ball offer at $120k, and after 2 rounds of counter offer we agreed at $127k by 09/25.
The main reason it was sitting on the market was that the Seller wanted to stay in the house and pay rent till June 2020.

How did you finance this deal?

Conventional loan, 20% down, 4.75% interest rate, 30 years fixed.
Process was very slow. Something I learned is to clarify in advance with the lender from which account the money will be coming from. This created an extra week of delay, which was in this case a week of rent lost.

How did you add value to the deal?

Right now sitting and collecting monthly check, didn't turn around the unit yet.

What was the outcome?

When we agreed on the Rent back, I discounted him $600 year and make the tenant in charge of the repairs up to the deductible.
So I didn't have to hire a PM.
This boosted my CoC.
It turned out that Tenant has renewed the lease for one more year. I didn't spend a single $ other than Mortgage, Taxes and Insurance.

Lessons learned? Challenges?

Lesson 1: don't be afraid of a low ball offer. Worst case they say no.
Lesson 2. Investing in good neighborhood gives you better property in the long term. The unit has appreciated in less than one year more than 5%!
Lesson 3: make sure your agent has your best interest in mind. My agent helped me with the Lease agreement for example and that was big for me.

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

I would definitely recommend my Agent. DM me for reference