Is not selling a house the same as buying?

[Troy Jaster]

Investment Info:

Single-family residence buy & hold investment in San Antonio.

Purchase price: $190,000
Cash invested: $19,000

This was my personal home for about 6.5 years, until December 2019. When we moved out, we turned it into a full-time rental. We also did a cash-out refi at the time of the tenant moving in.

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

We knew we had great equity in this house and when we moved out, we put it on the market to sell or rent because both avenues showed favorable projections. Additionally, it was our intent to use the equity (had we sold the house) to go buy the next investment property...so, the last time I checked, not selling a house is pretty similar to buying one, right? :-)

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

It was a standard MLS purchase in 2013. I was not yet a Realtor, so we used a great agent, and loved living here. When we bought the house, it was not our intent to turn it into a rental but we also bought this house prior to me being introduced to BP.

How did you finance this deal?

Original purchase was a fixed rate 15 year loan with 10% down. For the stage of life that we were in when we purchased it, it was great because we slammed the principal of the loan for 6+ years. We used a HELOC on it to help flip a property in the summer of 2019. When the tenant moved in (Feb. 2020), we did a cash-out refi and now have a fixed rate 30 year note on it.

How did you add value to the deal?

After we moved out, we replaced most of the carpet, painted most of the house, repaired a stretch of the fence, and just made it look pretty again. During the time we owned it, the only sizable updates we did were HVAC (approx. $6k) and tile flooring (approx. $3.5k).

What was the outcome?

From the day we bought this house, I've loved it. It fit my family's needs for several years and was a very wise investment. Our current tenant is in the house until 5/31/21 so we'll see what the sale and rental markets look like at that time and decide how we want to move forward.

Lessons learned? Challenges?

Be willing to be flexible. I was wringing my hands on whether to sell or rent this after we moved out until my investment mentor simply said, "Why don't you just try both and see what happens." I knew that the numbers looked good in both scenarios and I was too hung up on do we take the "good" route or the other "good" route. It took someone else to tell me, to basically allow the market to decide.

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

Myself