Investment Info:
Single-family residence buy & hold investment.
Purchase price: $610,000
Cash invested: $60,000
Sale price: $860,000
I originally purchased this house to by home. However, work moved me elsewhere right after closing so I immediately flipped it to a short-term rental. After for years of strong cash flow, I dedided I wanted to be more strategic about building a real estate investment portfolio. After mapping out a plan and rennovating the kitchen, I sold the house at the peak of the market using a 1031 Exchange. I'm currently in escrow on a new property where I will build an ADU to have two doors on the land. This will yield a higher cash flow than my previously property, be more stable than short-term rentals, and only use half of the profits in exchange fund.
What made you interested in investing in this type of deal?
Initially it was to be my primary residence. When I had to abruptly move for work, I needed a way to pay the mortgage. Traditional rent wouldn't cover it, so I worked at managing as Airbnb from a distance. This required me pouring over how-to's, pricing, cleaning companys vs management companies, etc. It worked out really well, especially in San Diego's market. While it wasn't without its challenges, I couldn't be more grateful for how it worked out. It also gave me my first taste of investing.
How did you find this deal and how did you negotiate it?
This is a long story, but here are the highlights. I was a first time home buyer who knew nothing. This led to a painful string of unaccepted offers, learning how to formally fire a realtor, dealing with the legal mess of that, and how my mortgage broker at the time and new realtor saved my skin. To this day, I cannot say enough kind things about Libby Rogers and her team in San Diego. She's trustworthy, knowledgeable, hard working, and total professional.
How did you finance this deal?
Traditional loan
How did you add value to the deal?
I rennovated the kitchen from net profits.
What was the outcome?
4 years of cashflow ~40% higher than my net expenses, a fully-funded rennovation, and sale $40k above asking.
Lessons learned? Challenges?
1. Do your homework--it pays in spades.
2. Be a great landlord--be fair, honest, and generous where you can be.
3. Always be recruting your team. In addition to a great realtor, I now have a mortgage broker, designer, contractor, management company, and handyman that I would trust with my wallet.
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
Yes! Send me a message and I can put you in touch!
