Investment Info:
Single-family residence private money loan investment.
Purchase price: $230,000
Cash invested: $28,500
I purchased this home as a primary residence with owner financing. The seller carried the note for 2 years until I refinanced with traditional financing. In November 2021 I purchased a new primary residence (new construction, conventional financing) and converted this home into a rental. Because of the dramatic rise in property values, I currently have a tremendous amount of equity in the home and am cash flowing $700/month. Pictured is my family in front of the home after turning the keys over to our tenants.
We have learned the value in buying a home with a ton of equity built in as our new primary has also gone up in value as the builder has raised pricing while building out the community. We plan to make our new home into a rental as well by buying new construction again in the near future and cash flowing our current home.
What made you interested in investing in this type of deal?
Well, first I needed a place to live. I was interested in buying a home and my landlord knew we were looking. We were having trouble getting a loan due to being less than 2 years in my new industry as a real estate agent at the time. We had a great relationship with the seller because we always paid on time and took care of the home. HE mentioned owner financing and it went from there. We bought the home in 2018 and live in it 3 more years before purchasing again.
How did you find this deal and how did you negotiate it?
We had already rented the home for 2 years, the landlord knew we were interested in moving on and offered to sell it to me. At the time he wanted a 6.5% interest rate. I did negotiate him down to 5.5% by offering a larger down payment.
Coincidently, the seller of this home is now my client and wishes he had never sold any of his properties. I am actively working with him to find more investment properties.
How did you finance this deal?
Seller financing, 5.5% amortized over 30 years with a 5 year balloon.
How did you add value to the deal?
We did improvements to the home while living in it including retiling first floor, landscape work, and repainting exterior. The HOA approved colors were quite boring so my wife actually joined the ARB and got new colors approved in the community. Now, instead of 50 shades of brown throughout the community, our house is a nice blue color!
What was the outcome?
When we purchased a new build home utilizing 5% down conventional financing we turn this home into a rental. It currently cash flows $700 per month.
