All Forum Posts by: Diane Menke

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $35,000
Cash invested: $9,000
Sale price: $225,000

When we bought this house, it was a rooming house a church group used to reintegrate people into the neighborhood. So the house was OK but not renovated. The area was still rough but coffee shops and creative folks were moving in. We bought this house at a great price, and held it for a while until values came up. Doing that time we rented to mostly recent college grads who were doing group living.

We made very low cost upgrades like a new kitchen, and bathroom, and lots of paint. We replaced a few windows, the roof and not much else.

While we owned the house we collected rents, and refinanced a couple of times so we could buy more properties. This house didn't owe us anything.

We decided to sell when the ARV and rents didn't support the renovations it was going to require.

The house sold to the last tenants we had there and we made a few more bucks. The buyers were happy and so were we!

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

It was a no brainer cash cow at a very low price in an up and coming area.

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

An agent we worked with found it for us on the MLS.

How did you finance this deal?

Commercial lending + cash.

How did you add value to the deal?

We renovated the kitchen, the bathroom, replaced windows, roof, some wiring and lots of cleaning and paint.

What was the outcome?

We had years of good rental income, refinanced at least 2x to pull out cash, and we still make a few bucks when we sold.

Lessons learned? Challenges?

This house had a large addition on the back which made it great for group living tenants. But the addition was not to code structurally, and we knew we would have to take it down and rebuild it if we decided to continue to hold it. That didn't make financial sense so we sold it. We no longer buy houses with portions of the house outside the area of the basement foundation as buy hold properties.

Investment Info:

Single-family residence buy & hold investment in Philadelphia .

Purchase price: $110,000
Cash invested: $25,000

Our development company, D2-2 Development Inc. bought this 2/1 sf with a walk out basement as a buy hold.

It needed to be cleaned out, new kitchen and bath, new windows, and finish the large room in the basement that leads out to the large back yard. This basement room adds useable sf to the house, so we get rents at $1400, tenants pay utility.

This past year we had to replace the water heater.

It's in a good neighborhood up and coming.

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

Cash flow and appreciation.

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

This was found by an agent friend of ours. It had been sitting for some time. Absent owners/sellers. Did not show well.

How did you finance this deal?

Commercial lending for purchase and acquisition, rolled into a 25 year fixed.

How did you add value to the deal?

We cleaned out the house, renovated the kitchen and bath, new vinyl floors and carpeting, new windows, added finished space in the walk out basement. We improved curb appeal.

What was the outcome?

It cash flows well and it's easy to rent because it's nicer than other rentals in the area. We expect it to provide a nice nest egg at our retirement.

Lessons learned? Challenges?

It was an easy deal. We have been doing this a long time and have experience. The hardest part was finding something at the right price. Things are very inflated at the moment. I think the biggest take away is make friends with good agents, tell them what you need, and they will keep an eye open for you.

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

Yes! I have a long term relationship with the folks at Elfant Wissahickon. Very nice folks and they "own" segments of the local market. Their business culture is very relationship oriented. They are in it for the long term.