Investment Info: 3/2 SFR in Hunstville, AL purchased out-of-state from Los Angeles.
Purchase price: $127,000
Cash invested: $48,848 (conventional loan @ 75% LTV + ~$13k rehab)
What made you interested in investing in this type of deal? This was my first real estate investment so my goals were fairly conservative, I wanted a balance of cash flow and stability so I picked a modest sized 3/2 home in a B neighborhood in my market.
How did you find this deal and how did you negotiate it? Straight off the MLS. I worked with a great agent who handled the negotiation and brought the deal to closing. Huntsville is pretty competitive and the best wholesale deals go fast! The MLS provided some good options and a more conventional route for a first timer.
How did you finance this deal? Conventional loan 75% LTV @ 3.5% through a local bank. Cash rehab
How did you add value to the deal? A small rehab, the biggest item was re-flooring the entire house.
What was the outcome? The property rents for $1,295 making it a little over a 1% deal. Rent was a little higher than I expected and did my analysis based on, so it cash flows at about $280/month which is just under 7% CoC. It took slightly longer to rent than I had expected which meant I paid an extra months holding costs but overall a smooth process and a fantastic learning opportunity.
Lessons learned? Challenges? Through the analysis process I learned that every property has an offer that makes sense on paper, but there are countless non-tangible factors that will influence how the investment turns out. I learned that you should always get multiple quotes on your loan. Someone told me if you're getting 3 quotes on a $15k rehab you had better get at least 3 for a 95K loan! Your relationships and team are everything when investing long distance.
