Condo Gamble by the Ignorant in 2005

[Dennis M.]

Investment Info:

Condo buy & hold investment.

Purchase price: $125,000
Cash invested: $45,000
Sale price: $125,000

Fresh out of university, my buddy and I bought a condo in Pensacola, FL in 2005

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

Youth, ignorance, and the bandwagon.

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

Real Estate Agent

How did you finance this deal?

$0 money down except closing costs via an "80-20" stack

How did you add value to the deal?

Renovated the kitchen and bathrooms: new cabinets, countertops, carpet, tile, sinks, paint.

What was the outcome?

Market crashed a year later and we didn't "break even" until 13 years later. It was definitely not a break even however if you consider how much we put into it and the rate of inflation over those 13 years.

Lessons learned? Challenges?

Market crash obviously didn't help, but my partner and I were completely ignorant of real estate investing and ran zero analysis of the property and what it could possibly rent for in the future. It negatively cash flowed for 13 years because we couldn't sell it without having to write a check to the bank at closing. So, we had to bite this bullet until the property value appreciated back to at least what we bought it for.

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

Our Real Estate agent was quick, professional, and we utilized him with the purchase and the sale of the property. However, we were 22 and really could have benefited by someone educating us about rental properties but that is probably too high of an expectation for a REA.