Multi-function Investment Property

[Holli Cobb]

Investment Info:

Single-family residence note investment investment in Redmond.

Purchase price: $350,000
Cash invested: $87,500

Purchased the house from neighbor to use as short-term rental. We also utilize the detached garage as a wood working area for our business. The rent from the house covers the overhead for the shop. The house gained $100,000 equity since the initial purchase.

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

Our neighbor needed to relocate out of state and approached us about buying her property. The detached garage was the perfect area for my husband to expand his wood-working business. The house is used as a short-term rental. The rental income covers all costs of the mortgage and overhead expenses for the entire property.

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

Neighbor approached us and offered it to us.

How did you finance this deal?

Initially, it as a lease with option to purchase. The first 18 months were paid directly to the owner then we used conventional financing with 25% down - funds from Roth IRA and Heloc on primary residence.

How did you add value to the deal?

Building furniture in the detached garage and short-term rentals.

What was the outcome?

The value of the property has increased significantly. The wood-working shop is expanding and doing very well. The house is booked 80% of the time.

Lessons learned? Challenges?

Within weeks of going live on our rental via AirBnB, Covid hit. AirBnB cancelled all of our bookings. One year later, AirBnB deleted my account without explanation or just cause. We launched our own platform to book and drive bookings to that site via VRBO.

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

I am a Real Estate Professional and I do have lenders I communicate with.