Investment Info:

Single-family residence buy & hold investment in Savannah.

Purchase price: $90,500
Cash invested: $24,000

Turnkey single-family deal in a C neighborhood that I put together with two friends. Projected project IRR 20% (5 yr hold) due mainly to the fact that we bought about $25k under market value. Decent cash flow on a section 8 tenant, though nothing to write home mom about. Financed through a local credit union on a portfolio note with a 20 yr amortization and 5 yr balloon.

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

I wasn't personally too interested in buying another tunrkey rental, but a friend of mine wanted to get involved in Savannah real estate and needed a local partner. He came in for most of the cash and is paying me a small management fee, so it works out well for all parties!

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

Friends of mine who run a wholesaling business brought it to me. I was able to get a good deal because not too many investors are interested in tenant occupied properties right now, and we have good rapport from all the deals we've done together. I actually tried to kick this deal to one of my clients but he passed - his loss!

How did you finance this deal?

Local credit union on a portfolio loan. No points, 25% down, 4.75% on a 20 yr amortization with a 5 year balloon. The short amortization cuts down cash flow, but our plan is to sell in a couple of years anyway so we'll recoup that cash. Overall I'm very pleased.

How did you add value to the deal?

We baked the value in by buying 25k under market value - we could refinance after a few months and pull out a large portion of our invested capital ;)

What was the outcome?

We still hold this deal and are cash flowing well. We did have to spend about $1000 on deferred maintenance, but we set aside a budget for that.

Lessons learned? Challenges?

We're learning the inns and outs of the section 8 program, first time for me. So far the housing authority has actually been great to work with and I'll likely be looking to buy more of these properties!

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

I am the agent, so I definitely recommend me! Billy Norse of Weissman Law closed it and he did a great job, and Workman's Circle Credit Union did the loan. Moseler Perkins Group was the wholesaler. Everyone was great to work with!