My second deal breakdown. OOS, SFH, LTR

[Meghan McGill]

Investment Info:

Single-family residence buy & hold investment in Fayetteville, NC that I plan to LTR using a PM. This is an out of state investment.

Purchase price: $120,120
Cash invested: $31,542
The Numbers: Free Cash Flow - $300, CoC Return - 11.44%

Contributors: My agent - Dan DiFilippo
Dan DiFilippo | BiggerPockets

What made you interested in investing in this type of deal?
After doing some research, I decided that the SFH market in Fayetteville was a great opportunity for my buy and hold strategy. The cost to entry is lower than my local market and the rental market should remain fairly stable because of the base nearby.

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

My agent, Dan DiFilippo with Five Pillars Realty helped me find this deal. It was on the MLS and was a flip that someone else had already completed so it was basically rent ready. The only catch was that it was still on a septic tank despite the availability of city sewer. I have decided to go ahead and get it connected now to avoid having to do it in an emergent situation down the road and because the costs will only increase over time. I have included this in my numbers mentioned above. Because of the competitive market, I offered over asking w/ the seller paying 2% of closing costs (there were multiple bids). Included in my offer was a clause that I would pay up to $5,000 over appraisal, but capped at my offer price. I knew that even with the extra cash, the numbers still made sense. I believe this is what made my offer stand out. Contract price of $120,120. It appraised at $116,000.

How did you finance this deal?

Conventional financing, 20% down payment, 3% interest rate. Plus the additional $4,000 cash needed to bridge the gap between appraisal and contract price. 

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

Yes. My Agent Dan was excellent as well as my lender, Carolina Arango with Resource Financial. I'm also working with a local PM. The deed was recorded a week ago and she already has a potential tenant lined up. The sewer gets connected next week.