First property. OPM (HELOC).

[Chris Springer]

Investment Info:

Single-family residence buy & hold investment in Pottstown.

Purchase price: $121,000
Cash invested: $2,000

Our first property was bought under our LLC with our HELOC. Tennants pay enough rent to cover all of our expenses (including HELOC repayment) and leaves us with some profit. We are currently working on purchasing the other half so we can call this a multifamily unit, rather than a single family. Commercial loan with 20% down from HELOC.

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

My wife and I have been interested in real estate investing for some time. We like this deal because it generates profit, we used OPM to buy it, and it is close enough to manage ourselves. We like the area, and believe it has more room for growth and improvement (although we are not depending on that).

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

Zillow... We negotiated via our realtor. Interest rates are low, we had renters lined up with a price already set, and rentals in the area were being bought up quick. We offered a little less than asking. We felt comfortable with this, because the property was move in ready.

How did you finance this deal?

We bought the deal using our HELOC and a commercial loan. Commercial requires 20% down, but because we bought it via our LLC, that is the route we went. Out of pocket, we spent about $2000 for the purchase, which was cash towards the deposit. We have the LLC to protect our life outside the business, in the case of legal issues.

How did you add value to the deal?

The rental was basically ready to go. We upgraded the bathroom and kitchen floors, put up newer cabinets in the kitchen, and replaced the washer and dryer with newer (used) ones.

What was the outcome?

We now have 3 tenants on a one year lease, paying 1300 total, and they pay all utilities except sewer and water (about $300 per quarter). Their rent covers all expenses (including HELOC repayment... principle and interest) and we walk home with some cash.

Lessons learned? Challenges?

I believe we could have charged more in rent, being that it is split between three tenants rooming together. There are improvements to be made, therefore I wish we did charge more, because I would like to beef up the CapEx savings. I´d also put sewer and water on the tenants.

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

I did. Reach out if you are local and interested in my realtor or lender.