Investment Info:
Condo buy & hold investment.
Purchase price: $50,000
Cash invested: $50,000
This cash flowing rental property is 1 of 2 that are the by product of a 1031 exchange
What made you interested in investing in this type of deal?
This deal was interesting because we were under the time constraints of the 1031 exchange rules, we were rookie investors looking to cash flow while minimizing those costly rookie mistakes, it was a sellers market and COVID's grip on the economy and the movement of goods and services had such a negative affect on the cost of materials that we decided the BEST case scenario for us would be to land the funds in a turnkey property that was cash flowing immediately.
How did you find this deal and how did you negotiate it?
We have a "rockstar agent" on our team that new the properties in the area. She knew the best areas to invest in. She also had contractors in her contacts that was able to assist in walkthroughs to better determine what our BEST case scenarios were and could be. We were able to negotiate the terms a little because we were coming in as cash buyers and we made offer on the former owners 2nd condo in the community.
How did you finance this deal?
Cash
How did you add value to the deal?
We've added value (TBD) by making small cosmetic repairs like windows, screen doors, fixing leak in bathroom and the deck attached one of the units
What was the outcome?
We're now about to reach the 6 month seasoning period that most lenders require and currently in the process of closing (waiting for appraisals....hence the TBD mentioned in the above comment) on a cash out refinance loan that comes w/a line of credit for up to 4-5x's available liquidity.
Lessons learned? Challenges?
The biggest lesson learned is to get off your tail and get in the game effectively immediately! We are about to reach our 1 year anniversary as investors and we've closed on ($40,000) and sold ($102,000) a property that was a partial seller finance ($25,000 out of pocket) on the $40,000 w/zero points, penalties or other interest payments. This allowed for a smooth 255% mark up of in that property : ) The only challenge was getting the 1031 done in the time allowed.
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
We have a our "core 4" locked in, so if anyone needs an agent, lenders, wholesalers, contractors (both class A and regular handy persons) or a qualified intermediary...please feel free to shoot me a note.
