First Rental Property - 2br/1ba Condo

[Account Closed]

Investment Info:

Condo buy & hold investment.

Purchase price: $205,000

$205k for a 2br/1ba, $1,800/month rent, $360/month cashflow. 25% down, 2.75% interest rate (with points).

Sealing the deal with the seller was all about learning what he needed -- time to find his next home. We have a 45-day usage and occupancy agreement at carrying cost. If he needs to stay longer, he'll pay full market rent until he finds his place.

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

It seemed like a good way to ease into the rental side of investing -- no reno., no property manager, etc.

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

I found it and saw it the day it came on the MLS with my realtor. I made an offer the next day.

How did you finance this deal?

30 yr. fixed conventional mortgage with 25% down and roughly 2.5 points up front. The interest rate is 2.75%.

The down payment came from a HELOC (10 year draw, 20 year repayment, adjustable rate at 4% currently) on my primary residence. We have $0 of personal cash invested in the property.

How did you add value to the deal?

The condo is move-in ready, and doesn't have much room for drastic upgrades. Down the road, we may look at adding some higher level finishes.

What was the outcome?

The owner agreed to our deal because it allowed him to remain in the condo until he found his next home. He pays carrying costs for 45 days, and, if he wants to stay longer, he'll become our tenant renting mont-to-month.

Lessons learned? Challenges?

Make sure you find out what your seller wants, and make it worth their while to go with your offer. Money isn't everything in a deal, so make the seller choose you!

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

Realtor: Seiji Shiraishi - Keller Williams, Livingston, NJ
Attorney: Margaret Miller - Montville, NJ
Mortgage Broker: Peter Appolito - Finance of America, Paramus, NJ