First Buy and Hold/ Exceeding the 2% Rule!

[Herbert Lewis]

Investment Info:

Townhouse buy & hold investment.

Purchase price: $30,000
Cash invested: $5,000

This is the first buy-and-hold property I purchased in 2018. The area is a C- area, but I was making $1,200 per month on rent. I decided to sell the property to another investor and reinvest the money in other houses.

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

I was interested in this deal due to the 2% rule and the acquisition cost was low.

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

This deal was brought to me by a real estate agent I met at a meetup meeting. I told him that I was interested in looking at rental properties in the Baltimore area. Since then I became an agent and started looking for properties after this transaction.

How did you finance this deal?

I used money from 401K and savings.

How did you add value to the deal?

I offered the buyer all cash for the transaction if we could close the deal.

What was the outcome?

I purchased the property and received a great first-time rental. I needed to put about $5,000 to get the house rent ready. The house only needed cosmetic fixes to make it stand out.

Lessons learned? Challenges?

My lesson learned from this is no matter the area there is always a market for all types of tenants. It's just a matter of how much time commitment you have to put in depending on the market you invest in. I purchased a few more houses in the area but I looked for better blocks. In Baltimore, you need to know the blocks well. One block can be a war zone, but the block on the other side can be a B+ neighborhood.

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

Yes, the agent became a close friend. I eventually joined his brokerage as an agent.