House #3 - My first Air BNB

[Steven May]

Investment Info:

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

Purchase price: $138,000
Cash invested: $41,000

House #3

Bought this little Waldo bungalow gem about 10 houses down from my personal residence. This was an elderly lady who had it as a rental, way below market rent & didn't want to make the updates to sell it on market. We agreed on a price and she wanted to do a seller finance deal to spread out her capital gains bill. Nothing better than owning a rental a few doors down for ease of management & I still cut the grass myself.

Put 20% down - 5 year note at 4.5% interest
After 5 years will cash out refinance - I may ask the seller if I can do it after 1 year.

We each had our own attorneys draft Deed of Trust & Promissory Note

The tenants moved out before closing and we got to work on the rehab.
All new interior paint, flooring, and light fixtures. All new exterior paint. Granite countertops. Resurfaced the tub. Took a wall out to open up the living room to kitchen.

The plan was to Air BNB this property (my first STR).

Total Rehab Cost:
$3,000 for interior labor
$1,000 for exterior labor
Roughly $3,500 in materials
Roughly $3,000 to furnish the house

The house is now bringing in $2100-2200/mo as an Air BNB

~18-25% CoC return (depending on the month) with about $25-30,000 in forced equity

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

Off market. Lady posted in a local FB group

How did you finance this deal?

Seller financing. 20% down out of pocket

How did you add value to the deal?

Full rehab

What was the outcome?

Cash flowing STR

Lessons learned? Challenges?

Furnishing a house takes more time than you would think to stay with a theme throughout.