First Deal! $62,000 check........;0)

[Chris Koeppel]

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $70,000
Cash invested: $12,000
Sale price: $130,000

Handshake deal. Initially going to be buy&hold, although a friend who was stopping by and watching the whole house renovation (and drinking all my wine) offered to buy it cash when done. Hard money loan with $5k of personal money, 15% interest only payments ($812.50/month), and I lived in it during whole process. Price of house increased $10,000 while renovating it, so basically lived for free. 3/2/2 with inground pool.

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

After moving out of my primary residence and renting the house, I was renting a room in a family members' house while driving for dollars. I mentioned to everyone what I was looking for (house hack and buy&hold) and cubicle neighbor had a family member pass recently and asked if I was interested in place if other family was not. This was a perfect opportunity to get hard money, needed my own place, and the numbers were just fantastic for any deal.

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

Day job coworker had a probate house and knew I was doing this sort of thing.

How did you finance this deal?

one-year, 6-month minimum payments, interest-only, balloon principal at end. 15% interest. 6-month renewal, with 2pts,$2000 fee. $5000 of personal money for skin in the game, and $11,780 in repairs and associated costs including holding costs as I lived on site during entire renovation.

How did you add value to the deal?

Renovated kitchen, relandscaped, new flooring, added garden on automatic watering timers as a selling requirement. New appliances, outlets, switches, and mitigated for lots of smoker damage

What was the outcome?

Had an option to pay off personal debt, and the proceeds would be able to do this. My primary goal was to be debt free in a year, and this was most important as previous debt interfered with many goals.

Lessons learned? Challenges?

Smoker houses have unique sets of issues like HVAC, ductwork, ozone equipment, cleaning requirements, and quality sealers and paints in significantly higher quantities than normal non-smoker rehab.

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

Just called a title company to work up the hud/paperwork, and to organize a mobile notary for both parties. When house sold it was a similar situation and buyer knew me. No realtors were dealt with. A very simple front and back end deal.