My first investment property purchased as an investment property

[Sean Honeycutt]

Investment Info:

Single-family residence buy & hold investment in Indianapolis.

Purchase price: $107,000
Cash invested: $30,000

Single Family 2 bed, 1 bath on 1/2 acre

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

I was looking to expand my portfolio.

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

This home was in a neighborhood that my PM and realtor (separate people, different companies) recommended. It has a positive cash flow, but it needed a LOT of elbowgrease and some professional help to get up!

How did you finance this deal?

Traditional financing

How did you add value to the deal?

I remodeled the bathroom completely from floor to stall, new floors, new paint, new vanity, new sink, new mirror, new hanging rods, new tile, even the plumbing was replaced. The kitchen needed new counter tops and a new floor, and the cabinets needed a really good sanding and a repainting.

Believe it or not, there was over grown trees and brush taking up about 30% of the backyard, it was a good 40 feet deep. After clearing that out and cutting it down, I found an old basketball court!

What was the outcome?

Well, the basketball court was interesting! I think it needs some remodeling, but the neighborhood and comps don't support it. I might add a half bath, when the water header and HVAC goes (i.e. when I have to buy new, I may as well buy small to get some room.)

Lessons learned? Challenges?

I put a bit too much trust in my PM company's estimator on repairs. Also, things I knew had to be fixed, I did not calculate into my purchase offer. I probably good have gotten a better deal if I had just outlined for the out-of-state seller all the items that had to be redone (Windows, Roof, full repipe, new driveway, etcetera) just to bring the home up to code and make it leaseable (I don't deal in junk, I like happy tenants.)

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

I mean locally, T&H Realty does a good job communicating, getting tenants, etcetera. There are cheaper agents, but these guys are pretty good. I wouldn't hire them as realtors however, I like Anna Stout at Tucker. She knows her stuff, the realtors at T&H are good at calculating rent expectations, but not investments - IMHO.

[Dmitriy Fomichenko]

Congratulations on your first investment property @Sean Honeycutt !