Investment Info:
Other buy & hold investment.
Purchase price: $100,000
Cash invested: $40,000
2-bed, 2-bath, 1,284 sq ft under air. This property is classified as a "condo", which is great because the association maintains the exterior (LOL, not really) and the roof, but it's half a duplex. This home was absolutely disgusting when we first got inside - it had shag carpet and the previous owner had cats. Nothing had been maintained, nothing was salvageable. This place was hoarder-hell and the stench was deadly ... we all know the smell ... it smelled like money!!!
What made you interested in investing in this type of deal?
BRRRR method - it just made the most sense for this particular situation (versus flipping).
How did you find this deal and how did you negotiate it?
We bought this home through the foreclosure auction - directly from the county. No negotiating, we were simply the highest bidders.
How did you finance this deal?
It was a foreclosure auction- payment is due in full within 24 hours so we had to pay cash. Because it was a quick and inexpensive remodel, we decided not to use our hard money LOC.
We are now doing a cash-out refi
How did you add value to the deal?
The basic layout was kept except we stole a second closet from the smaller bedroom and flipped it around to make that space into a walk-in-shower in the master bathroom. We used builder grade finishes throughout. We went a little more expensive on cabinets and went with grey wood grain cabinets and used a decent granite countertop. ALL the appliances were salvaged from other flips we had and we also picked up 1,500 sq ft of FREE pavers from some rando on FB looking to get rid of them :)
What was the outcome?
Purchase price: $100,000
Back-due taxes: $8,000
Utilities lien: $2,000
Renovation and holding costs: $30,640
Total cash invested: $140,640
Appraised: $175,000
Cash out refi: $131,250 (75% LTV)
PITIA: $1,207
Rented: $1,600
We have less than $10,000 in cash left in this deal and we gross $4,800 per year
WHERE ELSE CAN YOU INVEST $10,000 AND GET BACK $4,800 PER YEAR???
Lessons learned? Challenges?
THE BRRRR METHOD WORKS!!! Because EVERYTHING is new I don't foresee our maintenance being more than $25 a month for a long time. Condo is responsible for roof. We also are our own property managers so we save there too. First day on the market we received 2 full price offers from qualified tenants. Our vacancy rate should be minimal as this area has super high demand, and yeah, I am totally bragging here- this is one of the nicest rentals in that area.
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
I am a licensed Realtor so I have that part covered. I use Finance of America Commercial for my HML LOC (although I didn't use them on this for the purchase or rehab) and they are also doing the mortgage. In the past, FoAC wasn't the most competitive with their rental investment mortgages, but I am happy to say that they are back in the game!
