Sell @ 350K or C/O - Refi and start a Rental Empire?

[Theo Anderson]

Investment Info:

Condo buy & hold investment in Austin.

Purchase price: $199,900
Cash invested: $40,000

This property was something I stumbled into when reconnecting with my partner C.J. after being apart for 7 years. My goodness what a learning experience. A little history on the house; C.J. purchased this property in August of 2018 with some help from her parents and a standard home loan. Bought at an incredible deal of 200K for a 1,722 SF Condominiums, 3 minutes from Dell Computer's headquarters, in North East Austin, Texas. Over the past 3 years the property has gained 170K in equity value.

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

The timing of our rekindled relationship was both perfect, and traumatic. Only 5 months after we got back together, and 2 weeks after I got my Insurance Adjuster's License, Central Texas was struck by the most random freeze-pocalypses in history. Like many homes in our area, our water pipes burst, causing ten's of thousands of dollars in damages. However, I knew a bit of policy knowledge, estimate writing skills and how to reconcile the insurance estimate to well over their original settlement.

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

Like I mentioned, the stars aligned in such a way that it was easy to step into. One of the hardest parts of the whole process was choosing to either sell or hold and rent this delectable piece of real-estate. We first went with sell and put the house on the market in the first week of August 2021. wo major factors contributed to our decision; COVID inflated values by crazy margins and our contractor offered to foot 12k of the repairs to make the property sell ready if we use his GF as realtor.

How did you finance this deal?

One of the hardest parts of the whole process was choosing to either sell or hold and rent this delectable piece of real-estate. We first went with sell and put the house on the market in the first week of August 2021. Two major factors contributed to our decision; COVID inflated values by crazy margins and our contractor offered to foot 12k of the repairs to make the property sell ready provided we use his GF as our realtor and pay him back after.

How did you add value to the deal?

A high-income Job, Knowledge of Insurance Process, Estimate Writing/Claims Handling that increased insurance pay-out 30K over original settlement offer.

What was the outcome?

Property was fully renovated which paved the way to either sell at a higher price or cash-out refinance for increased equity value.

Lessons learned? Challenges?

Never allow fear to get in the way of your success. If we had chosen to rent from the beginning we would have been able to use the money not spent on making the property sell-ready towards renovations/expenses on our next BRRRR property. However, we were afraid of getting into more debt after such a serious loss. Always do the math!!!!! Selling/buying/flipping/renting is an emotional process that can only be checked by numbers. Every great system is built on checks and balances.