Investment Info:
Single-family residence buy & hold investment in Hampton.
Purchase price: $40,000
Cash invested: $40,000
3 bedroom, 1 bath, 950 sq ft, class C.
What made you interested in investing in this type of deal?
I had just arrived at Langley AFB, VA in January of 2014. After 13 years of being in the military this was the first time I had lived in an apartment. It was nice at first as I was able to travel up and down the east coast visiting military friends I hadn't seen for a while and not having to worry about maintaining a yard or a house. But, after about 10 months I started to get a little stir crazy and needed to get my hands dirty so I started surfing HUD and Fannie Mae sites for a fixer-upper.
How did you find this deal and how did you negotiate it?
I found the property through homepath.com. I actually met the listing at a different property. I didn't want it due to structural damage. The agent mentioned there was another Fannie Mae property down the street they were getting ready to list, but he hadn't seen it yet. We went down to look at it. The house seemed solid and something I could work with. Asking price was $40k, I offered $30k, Fannie Mae countered with $40k, I said,"ok, let's do it." haha
How did you finance this deal?
Paid cash.
How did you add value to the deal?
I completely gutted and remodeled the kitchen and bathroom, refinished the hardwood floors, added central air all while living in the property. The military pays a housing allowance. That allowance went toward the rehab. Once completed I was pocketing all that allowance.
What was the outcome?
In the first few months of rehabbing the property I met my future wife. Two years later she and I purchased our home. I rented out that fixer upper, opened a business line of credit using the property as collateral and purchased another rental unit.
Lessons learned? Challenges?
A remodel is never as simple as it seems from the outside. You have to see past the cabinets and sheetrock and visualize what problems you may encounter in the walls or floors. This was a house hack. I went into it with no real plan or expectation other than I just wanted to swing a hammer, make something pretty, and say "I did that." It turned out to be a great investment which lead to the purchase of another rental unit.
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
Not on this one. I just went directly through the listing agent.
