First Deal Completed

[Richi Brown]

Investment Info:

Single-family residence buy & hold investment in Clinton Twp.

Purchase price: $88,000
Cash invested: $11,000

Contributors:
Michael Helfant, Joe Hammel

Purchased a 3 bed 2 bath single family home in Clinton Twp, MI using a 203K loan. The property needed mostly cosmetic repairs, there was some mold in the attic and electrical work, but nothing too crazy. The house was in probate, so we had issues with closing due to the courts throwing different obstacles. Not to mention the added difficulties of satisfying the banks requirements for contractors, appraisals, and paperwork.

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

I wanted to get my first deal done, and figured using a 203K loan was a good way to force equity and put little money down.

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

On the MLS. We did not negotiate, there were multiple offers made on the house so we put in an offer a few thousand over asking price with a higher than normal percentage EMD.

How did you finance this deal?

I used bank financing with a 203K loan. Then for the down payment and closing costs I pulled from my 401K without penalty using the CARES Act.

What was the outcome?

The property is officially closed, next is getting the contractors to come in and complete the rehab. They are starting within the next few weeks and should be completed and have the house move in ready by mid-February. After the rehab I will have about $20,000 in equity in the property and paying a mortgage instead of renting will save me over $100 per month and I will be in a much nicer home.

Lessons learned? Challenges?

"Two is one, and one is none."

The biggest issue I faced was finding reliable contractors in an extremely hot market. Using bank financing had my hands tied. I had to find contractors that were willing to deal with more administrative headaches, have more skin in the game, and meet stricter requirements for a job that was fairly small. Contractors had so much work that they were able to pick and choose what jobs they would take on and given my situation, I wasnt their first choice.

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

Joe Hammel & Mike Helfant were the two agents that kept this deal moving forward! This deal went on for about 6 months and there were multiple times where I was ready to walk away and cut ties from the deal, but Joe was able to rerun me through the numbers and talk sense back into me. Mike was present for every contractor that walked through the property and was very flexible around my work schedule to get it done! Both agents were well connected and knew the right people to call to get answers