Investment Info:
Single-family residence buy & hold investment in Columbus.
Purchase price: $36,000
Cash invested: $50,000
1200 sq. ft. Single-family 3bd,1.5 baths purchased from a wholesaler. The property was only ever occupied by the original owner since 1960. When the matriarch of the family passed away the children didn't want to keep the house. The home was kept in reasonably good shape, but there were some deferred maintenance issues due to the owner's age. The original carport was enclosed to make a bonus room at some point. The county recorder did have the room as part of the square footage.
What made you interested in investing in this type of deal?
The low purchase price, rehab cost, and relatively low barrier to entry for a first-time BRRRR.
How did you find this deal and how did you negotiate it?
I found this deal through a wholesaler at a local real estate meet-up.
How did you finance this deal?
The initial purchase was with a personal loan of $40k from my bank (USAA) and the rehab was budgeted at $11k and financed by my fiance using her personal savings.
How did you add value to the deal?
The value add was through the rehab that consisted of a new roof, updated the fuse panel to a breaker panel, new LVP flooring throughout, minor bathroom updates and paint, repainting the entire interior, adding new hardware and paint to existing kitchen cabinets along with new countertops and sink, new stove and rangehood, and lots of overall minor deferred maintenance.
What was the outcome?
After we completed the rehab we began searching for a local lender to refinance the property. Six months after the purchase the home was appraised at &100k and I was able to refinance up to 80% LTV. I chose to refinance for $67k to repay all loans and holding costs with some extra for reserves. The property currently cashflows about $150/mo. although with some unforeseen plumbing repairs and a new HVAC it has yet to yield true cashflow.
Lessons learned? Challenges?
Lessons learned were when doing your rehab estimate focus on the expensive capital expense items first. Knowing the age of the home I still tried to hope (never a good strategy) the HVAC and water heater would hold out for a couple of years. Spoiler alert, they did not! The water heater died within 3 months and the HVAC went out at the end of the summer. There were also a few plumbing unknowns that arose with the first tenant. Have a plumber inspect the property!
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
Due to the size of this deal, I did not use an agent, although the wholesaler was also a licensed real estate agent. I tried to stay local and use a local credit union for the refinance, but I will not use them again. Their customer service wasn't very good and they sold off the loan anyway. However, the local title lawyer, Jake Wallace, I used was awesome, and would definitely use him again.
