Small single-family FL rental provides solid returns

[John Hutchinson]

Investment Info:

Single-family residence buy & hold investment in Tampa.

Purchase price: $75,000
Cash invested: $14,000

A typical FL middle-class house built after WWII. Built using masonry to resist extreme weather conditions often seen in FL.

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

Saw obvious long-term cash flow after a simple investment.

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

Off-market. Owner kept the house after moving his family to Fort Worth, TX. Had never been a landlord and didn't like it. Was looking for an escape hatch. Found the seller by simply telling a friend-of-a-friend of my goals.

How did you finance this deal?

Conventional residential loan after rehab was completed and rent stabilized with a new tenant to get initial investment returned.

How did you add value to the deal?

Reconditioned upon 1st vacancy. Rent was initially $1100/mo. Performed extensive (mostly) cosmetic updates to flooring, mechanical systems, appliances, reworked kitchen to create a more modern open floor plan (removed walls) w/ island, and bathroom.

What was the outcome?

Rent increased to $1450/mo. But have much fewer ongoing repair costs. Easy to rent now that the home is more updated that competing options.

Lessons learned? Challenges?

Buying an older house (built in 1959) requires more replacement components than anticipated. Leave a significant budget for unplanned items so your overall goal or project is not at risk of failure. FL is becoming very difficult to find insurance carriers willing to accept risk.