Primary Residence/summer vacation rental

[Colin Williams]

Investment Info:

Single-family residence buy & hold investment in Nantucket.

Purchase price: $230,000

This is our primary residence that we rent out to vacationers in the summer months. We live on a summer vacation destination island in Massachusetts. It's a 2/1.5 SFR and we're a family of 8 (2 dogs).We are using some of the equity we took out in a cash out refi to pop the top this fall and put 2 bedrooms with 2 bathrooms and a living area upstairs making it a 3/3.5. We bought this from my father who bought it from my great grandmother when I graduated H.S. so that I could afford something here.

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

It's my hometown and we had the opportunity when I left the Marine Corps to move back and purchase this home and I had a job opportunity waiting for me as a heavy equipment operator doing excavation and house moving (lifting a house off its foundation and moving it somewhere else). So this investment was solely based on fact that it is a family home built by my grandfather for his mother that was purchased by her grandson for his son.

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

We purchased it from my father for what he paid for it plus improvements over the ten years he owned it. The only negotiation we had wasn't really a negotiation, but more of a demand, was that if we ever sold, we would have to buy something else on Nantucket.

How did you finance this deal?

We used a VA loan to finance the deal. No money down and we were able to waive the funding because the fact that I have a rated disability from the VA. We saved over $20k in closing costs because of that and the first summer we rented we no longer had any cash left in the deal. All this happened and we didn't even know what we were doing. Very fortunate.

How did you add value to the deal?

The value we added to this deal was bringing our children back to Nantucket and being closer to family.

What was the outcome?

The outcome of this deal is this house is going to be the start of our financial freedom. After the renovation is over we will be able to rent this property out seasonally and this home alone will be able to replace my current salary. It will also provide us with the capital to expand and purchase more buy and hold properties.

Lessons learned? Challenges?

Our biggest challenge from this whole thing, is trying to get access to the equity in the property. We currently have a few hundred thousand in equity that we can't use at the moment. But as soon as this becomes a 100% rental for us, it will open up a few more doors for us.