Investment Info:
Townhouse buy & hold investment in Eveleth.
Purchase price: $163,900
Sale price: $174,900
Bought this investment property right out of college with $0 down. The unit was fully leased for the entire ownership period. My tenant had the first right of refusal on the property, but decided not to exercise. It was a successful ownership as well as exit. The unit traded 2x subsequent to my disposition, both times for less than my sales price.
What made you interested in investing in this type of deal?
It was a new construction townhome with no rental restrictions, at the time. So, I knew that I would be able to purchase with little to no money down, would have very little (if any) property responsibilities based on the age and HOA. I was just getting started with my career post college, so it was a good supplement to my income.
How did you find this deal and how did you negotiate it?
I was introduced to this deal through a friend of mine who was a commercial real estate broker, who owned 2 units in the complex, and another one of my good friends also owned a unit in the complex.
How did you finance this deal?
This deal was financed with traditional bank financing (FHA) with little money down.
How did you add value to the deal?
I did not do any improvements to the property other than paint and window furnishings.
What was the outcome?
Sold the property two years after purchase for an $11K gain.
Lessons learned? Challenges?
As I was early in my career, I ended up selling two years after purchase because I moved out of state, and did not understand (at the time) how to manage investment real estate remotely. In addition, I was unaware that there would be a new assessment from land to a completed unit, so the taxes increased significantly, which led to a few months of negative cash flow.
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
Yes; however, my agent at the time, is no longer an agent. I have become a broker subsequent to this transaction, and now frequently help investors buy and sell real estate.
