Investment Info:
Single-family residence buy & hold investment in Rochester.
Purchase price: $153,000
Cash invested: $30,600
I bought this 4 bedroom, 2 bath, 2 car garage single-family home in 2016. I replaced windows, furnace, added A/C, refinished hardwood floors, remodeled kitchen, bathrooms, and new electric panel. Over four years, I house hacked with two roommates usually at a time. Completed a Cash-out Refi (BRRRR) and successfully purchased another property with only $9000 of my own funds beyond the cash-out. This property will be turned into an AirBnB Short-Term Rental.
What made you interested in investing in this type of deal?
I wanted to purchase my first house, fix it up and eventually rent it out or sell it. Everyone has always told me "I wish I never would've sold my first house." I will heed their advice and follow that path.
How did you find this deal and how did you negotiate it?
I found this property off-market and bought through the sellers. I was potentially going to list it for sale for them and asked them if I could purchase it off-market and they agreed.
How did you finance this deal?
I financed this deal through our company's in-house mortgage company. I started out with an FHA Loan with only 3.5% down for my first home. Later on, I completed a cash-out refinance, switching to a conventional loan with no PMI, keeping 20% equity in the house.
What was the outcome?
I bought this property for $153,000 and paid down the principal to $130,000 over 5 years. I put about $30,000 to $35,000 into it. The appraised value on the cashout refi I completed was $235,000. I took out $49,000 and purchased another investment property for $285,000 (single family home) and only had to use $9000 of my own funds to buy that next property. Next step for my first house is to turn into a Short Term Rental to be managed by a property manager for $150-175/night!
Lessons learned? Challenges?
Buying an older house requires a lot of work, money, time and patience when you're a young investor. Save up as much cash as you can before you buy an older home. House hacking was a great way to recoup my expenses I had in fixing up this house.
