Investment Info:
Single-family residence buy & hold investment.
Purchase price: $29,000
Cash invested: $12,000
This was the perfect description of a home with "the right things wrong". I noticed the property a month or so prior. It was listed for $60,000. Single family, 3 bed, 1 bath in a so-so area. The neighborhood would rent for $800-$900 but $60,000 was too high. I told the listing agent I was interested for a lower price if they ended up lowering the price. A few months the price dropped, I put in an offer and I purchased it for $29,000.
I was able to find a private investor to loan me the funds for purchase and rehab. I borrowed $50,000 at 10% interest for 6 months. I borrowed way too much on this deal as I was originally thinking of siding it and re-roofing it. I decided half way through to leave those things undone. The renovation ended up costing me $12,000 and taking 40 days. We painted the entire thing, tore out the carpet, refinished the beautiful pine/oak floors underneath (These floors turned out GREAT, they are by far my favorite floors I've ever redone), painting the cabinets, adding new flooring in bathroom and kitchen, subway tile surround, new lighting, new garage roof and staging.
All in all I am happy with the way it turned out. I hire out 100% of the rehab on my flips so I had a couple contractor challenges, some scheduling mishaps, but 40 days was a good turn around for everything that got done.
I listed the property for $65,000 initially and had a lot of showings but mainly people didn't like the area. I lowered the price after 30 days to $59,900, still no offers. I held an open house for buyers and renters. We received 5 applications for rentals at $899 a month. Once we screened the tenants we offered it to the best candidate and they moved in two weeks later. From there we applied towards refinancing the property. Once refied my payment will be $680 PITI, it is already fixed up so maintenance will be minimal, I manage properties in house so the cash flow should be around $200.
All is well with the world until...... Surprise, the neighbor's house was targeted for a drive by shooting and my house was hit instead! Bullets went through my tenants bedroom window! Luckily no one was hurt. I called to see how they were he said, "we are unhurt and unshaken", MY MAN! I was afraid they would want to move out right away, but they stayed!
So with no turn over, steady income and stability it wasn't all bad. This was not by best deal, but it was a solid single that I can add to my portfolio and try to sell again maybe after the tenants move out.
What made you interested in investing in this type of deal?
They are easy to find in my market and typically end up around the 2% rule. Good return, I can get in and out quick and hold or sell at the end.
How did you find this deal and how did you negotiate it?
Agent in my office
How did you finance this deal?
OPM, borrowed $50,000 at 10% interest
How did you add value to the deal?
Renovated it, paint, refinished floors, tiled surround, swapped light fixtures, added vinyl plank to bath and kitchen.
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
I am a realtor in Lansing Michigan with Coldwell Banker
