Starter home turned rental

[Aaron Malejko]

Investment Info:

Single-family residence buy & hold investment in Canon City.

Purchase price: $106,000
Cash invested: $15,000

2 bed/1 bath home. Probably built in the 40s. Full finished basement. Close to downtown. No garage.

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

Hadn't planned on investing. We just wanted a small inexpensive home. We were moving from out of state and needed a place to start.

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

Found it on Realtor.com. Had to rely on the advice of a buyer's agent for pricing. Listed for $107K, bought it for $106K.

How did you finance this deal?

Conventional financing. Since we were moving from out of state and claiming income from the state we were moving from, we weren't able to claim it WOULD be our primary residence. Financed as a "vacation home" which required 10% down.

How did you add value to the deal?

Tons of paint. Walls and ceilings of one bedroom were EGGPLANT purple. Replaced light fixtures, remodeled kitchen, replaced toilet and bathroom sink. Replaced fence and extended to property line. Added gutters.

What was the outcome?

We went on to a larger house and after some work, this became a solid rental.

Lessons learned? Challenges?

Be careful trusting a buyer's agent to be your eyes, ears and nose if you aren't seeing the place yourself. We couldn't see the house in person, so asked the agent to let us know if it smelled at all. He said it was great. Got there after closing and it reeked of cigarette and cat piss. It was left filthy. Seller took the ceiling fan blades and lightbulbs prior to close. Square footage in listing was all lies. It's all good now, but see things for yourself if possible.

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

Not on this deal.