Lipstick on a prize pig!!

[Lisa Anderson]

Investment Info:

Single-family residence other investment in Phoenix.

Purchase price: $292,000
Cash invested: $10,000

Five bedroom home that is perfect to separate into two residences. Front portion will be rented out short term rental 2 bedroom 1 bath and the back half will be my personal residence.
Purchased for just under $300k end of 2018 and it has appreciated (according to Zillow and comps) to roughly $550k.
Due to covid I have been unemployed and really just down, started a self build pool that sat for nearly a year due to contractors unable to work. Used what was left of savings to finish the pool. My thoughts were to raise the value of the home to rid my mortgage of MIP. Unfortunately the loan package is unable to remove the MIP and I must refinance. Being unemployed for a year has decreased my income and I have switched from W2 to a 1099 income model. Re-fi doesn't appreciate 1099 "start up" so I've got to work for the next two years to rebuild my credit profile as a 1099 income earner. To help my funds and out of pocket each month I have decided to live a smaller footprint and Air BNB half of my home. I intend to figure out the build out process and make my mistakes here in a property I own and can be very present. Starting very small to increase as I go. I have been a property manager and love real estate. I understand the process of finding "deals" and look forward to utilizing the equity in my current property, learn how to put a rehab together and expand a portfolio.

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

It's a method to increase my monthly income, potentially paying for my mortgage each month. This frees my 1099 income to put back into the mound of debt accumulated while being unemployed during the pandemic. I've got two goals: increase personal credit and refinance my mortgage to access the equity.

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

Zillow.com had it listed for a year. It is an ugly home that had some lipstick put on the pig. Odd back end of the house add on, shoddy workmanship and really cheap materials. No one wanted the eye sore but it was an ugly house in an up and coming neighborhood. Biggest house I could afford in the hood.

How did you finance this deal?

First time buyer program through FHA

How did you add value to the deal?

Pool and honestly just waiting it out. The secret is out on this area and homes are sky rocketing in price. If I'm not careful I will price myself out of any purchases around here. Realtors/investors are snapping up the properties and they all look exactly the same. Gray tile that looks like wood, gray/blue glass tile borders, granite counters, gray wood look laminate. It's all about the same look. Gray/white, granite and forget the backyard.

What was the outcome?

My property has nearly doubled in value

Lessons learned? Challenges?

I can find the deals. I know what to look for, I recognized the value the sheer square footage of the property offered, it was ugly and no one wanted it. Cosmetic touches to front/back. But as always, the more crap you unearth (I like to think of unburying the cat crap in the litter box) the more issues encountered. I keep having electrical issues in my kitchen. Use the toaster with the lights on and blow a fuse. Run the microwave while the coffee pot is on, blow a fuse.

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

Not in the slightest. I wish there was a forum to tell buyers to stay away from a specific agent AND the builders. The work done on the house is the worst but cleverly hidden from the home inspector. Washing machine hook up but not to a drain, A/C condensate not routed to outside but in the walls (that was fun), electrical issues that were to be "repaired" but were not actually. It's been a great learning opportunity!!! The only regret I have is not offering less!!!