Single family, new construction in middle of COVID

[Sebastian Libonatti]

Investment Info:

Single-family residence buy & hold investment in Portland.

Purchase price: $567,000
Cash invested: $120,000

New construction, not our ideal investment but needed to act to avoid more opportunity cost loses by holding too much equity at the time. One of the first houses bought in highly sought Falmouth development, prices have significantly increased since we signed off on it (October 2020). As passive investment as it gets. Cash flow shown here is the forecasted one as of 2022. First tenants were given a discount to rent during construction. Post-construction rent will allow for close to 10% CoC and 0 work since it's brand new.

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

Just needed to offload equity quicky, one of first buyers on a new development so we were able to capture some equity quickly. Learning experience in dealing with contractors, tenants, etc.
Now looking to either sell it in 2022 once the whole site is completed and houses worth much more or hold until we find better opportunity.

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

MLS

How did you finance this deal?

20% equity, conventional loan

How did you add value to the deal?

No value added other than negotiating construction cost for basement to increase squarefootage, bathroom, rooms to add more value. First of 10 buyers on a large site also helped build equity, city now slowing down construction. Best school around so lots of demand for rentals but almost no supply.

What was the outcome?

Found tenants during the construction, retirees, low to no management to do. Easy income.

Lessons learned? Challenges?

Big one! Don't bother being hands on to save $5-10k, find a way to distance yourself. Too many frustrations with extremely bad contractor that was dealing with another job and too many projects.
The issue with the deal is only "I could have made better ROI elsewhere if I had more experience or better network", but still getting to 10% CoC very soon and appreciation in this area is going to be at least 4-5%/year on the conservative side. Now looking for much larger deals.

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

Tyson Wilkins Way Point Brokers (amazing guy, knows everybody, very large rental company, resourceful, etc, etc)