Investment Info:
Other buy & hold investment in Cortland.
Purchase price: $155,000
Cash invested: $50,000
This is a 4.5 acre commercial multi use property in a fantastic location. Zoned for commercial and agricultural use. Anything except heavy manufacturing. This is our primary residence soon to be either refinanced and leased, rent to own or sell. This is the property we are using to start investing.
What made you interested in investing in this type of deal?
At the time I was expanding my lawn care business and needed the space. Wife found it as a FSBO. We had no experience. Made the mistake of not having a disclosure nor a inspection. Paid for that in many unknown repairs and dollars disappearing in what seemed a never ending pit of replace and repair. NOTE TO ALL BUYERS : Have the deal inspected by a qualified and knowledgeable inspector or contractor.
How did you find this deal and how did you negotiate it?
FSBO. Negotiated direct with seller. Used their lawyer. We picked title. Hand shake kind of deal. They had on market with a listing agent and could not sell. We came in at a time they were just ready to walk away and retire. Even though there were many unforeseen costs we still made out in value. I'm still in process to seeing if that last statement is true.
How did you finance this deal?
Originally, owner financed. 4 years at 6% and $10,000.00 down. Refinanced on a COMMERCIAL LOAN at 6.5% for 15 years. NOTE TO ALL BUYERS: Just learned from a mortgage lender I was networking with that if I can get zoning to put in a letter that if my house burns today zoning will allow me to build a residential house on it tomorrow. If yes, I can use residential Loan to finance! No bank that I called in my area ever mentioned this. Pursuing this option as I speak.
How did you add value to the deal?
Even with the unknown repairs there was value in the deal. Location. high desire area. potential. I was able to perform 80% of work needed. Made changes to house that added resale value.
What was the outcome?
Desire is to rent and hold property and refinance on a 30 year residential loan and buy new Home on BRRRR principles and have money left over to put down on a couple of other properties with BRRRR principles and keep growing from there.
Lessons learned? Challenges?
Get inspected. Need more than trust and hand shake mentality. Trust no bank to keep their word or add information that benefit the borrower. Instead of calling 3-4 BANKS for a loan I should have called 40 plus INDEPENDENT lenders, banks and added some circle of friends to pull together my best option. The education I would have received would have saved me thousands. I was not ready at the time to understand the principle of real estate investing. It was just another home we were buying.
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
Yes, The lender we used was a local branch of Huntington bank in Howland, OH. The bank manager Sharon made the deal happen. She was a tremendous asset to bailing us out from another lender that fell through at the last minute.
