Investment Info:
Single-family residence buy & hold investment in Wassaic.
Purchase price: $317,000
Cash invested: $100,000
Sale price: $725,000
3 bedroom 2 bathroom cape style on Cape Cod built in 1985. The property was in the middle of a flip from a man who lost the passion and energy to continue so it needed a lot of work.
What made you interested in investing in this type of deal?
My wife and I were looking at lesser expensive vacation condos when our Realtor showed us this place. The vaulted ceilings in the living room and the double sided fireplace caught my eye. About 10% of the property was renovated and the rest was stuck in 1985. There was a lot of work to turn it around and I was inexperienced with homebuying but it was worth taking a chance.
How did you find this deal and how did you negotiate it?
Our Realtor on the Cape found it and we offered about $20k less than the list price. At the time in MA, we were getting crushed with snow storms and were hoping that few people saw the place and the potential. They countered and we settled on the purchase price pretty quick. We were in Aruba e-signing papers during the closing!
How did you finance this deal?
Standard 30 year mortgage
How did you add value to the deal?
We did a lot of the initial renovations ourselves. I did the kitchen and both bathrooms while living in there. We put in tremendous time cleaning and clearing the backyard. After we moved out and rented via Vrbo, we really needed to redo the kitchen and bathrooms which we used the income money to complete. By the time we moved out, not a single room was left untouched.
What was the outcome?
It's a slight deviation but along the same lines as the BRRRR method, although I didn't know that process at the time. Owning it as long as we did allowed us to pay a significant portion of the mortgage down and generate some great revenue from vacation rentals. But there was a lot of luck. We bought in a buyer's market and sold in a seller's market which helped.
Lessons learned? Challenges?
Lessons:
• We weren't afraid to do something new and learn from mistakes doing a lot of the work ourselves. I'm thrilled we took the chance.
Challenges:
• Vacation rental property management is a rough business! People are weird and can be weird when it comes to things they look for in a rental.
• Being off Cape, 1hr and 45min is a tough distance especially in summer. Finding reliable people to assist takes time.
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
John Bowen with Bowen Real Estate of Cape Cod absolutely works and we had a great offer during our first open house when it came time to sell this past year.
