Long distance buy and hold...and sold (mistakes were made)

[Gregory Schwartz]

Classic story, I read "Long-Distance Real Estate Investing" and instantly knew I had to buy in a cash flowing market hundreds of miles from my home. I chose a strong market, ran the numbers, and then ignored all the other advice in the book. Needless to say, mistakes were made. 

Market: Huntsville AL

Purchase: 71k duplex

Rented for $450 per side

Rehab/Repairs over 2 years: $26,000

Cash invested: $40,600

In the following 2 years, I neglected to pay taxes on time, allowed a unit to sit vacant for over 2 months, and only visited the town 2 times. Needless to say it didnt cash flow.

We did however manage to renovate one side (roughly 5k) and increase the rents bringing in over $1000 between he 2 units.

The good news is that we purchased in a great town with some powerful appreciation. The decision to sell was based on our goal to consolidate our portfolio to our new home in College Station and Bryan, TX.

SOLD: 30 December 2020 for $117,000!! 

When the dust settled we profited $17,800! Making our final IRR over 20%.

I learned too many lessons to share them all. But, I'll leave you with 2 big takeaways;

1. Picking a great market can have a huge impact on appreciation

2. Buying on sound conservative fundamentals helps absorb the mistakes that will be made. 

[Neely Coble]

Great story and good advice.  I agree with your point about buying on sound conservative principles.  If things go well you are in for a pleasant surprise, but when they don't you should have enough cushion to absorb the bumps as long as you were conservative in your underwriting.