Investment Info:
Single-family residence buy & hold investment.
Purchase price: $196,500
Cash invested: $10,000
I live outside the country and returned to the USA on a mission to do my first deal in 90 days. My brother ended up wanting to move into the home, so I was able to run it as a primary w/ 5% down. I stay with him anyway when I'm back in the country, so this deal turned into a SFH house hack. It also left me with most of my investment capital so I can do deal #2. I don't cash flow much on this one since my brother's living there, but still comes out to be great ROI given the minimal I put down.
What made you interested in investing in this type of deal?
This house is located in the historic district of downtown Fuquay. It's in an area that's highly desirable to live given its walkability within Fuquay and proximity to parks, schools, restaurants, and breweries. The home's location and price point will allow for easy rental in the future if my brother were to decide to move.
How did you find this deal and how did you negotiate it?
This home had already gone under contract twice in the previous year and both deals fell through during due diligence because the sellers were either unwilling to make or unable to afford any repairs. The home belonged to the seller's mother who unfortunately had to be moved into a nursing home, and the owner's daughter and husband were the ones selling the property on her behalf. I was aware of the property before it hit the MLS for 3rd time and submitted an offer its first day back on market.
How did you finance this deal?
5% down on a conventional loan with a local bank.
How did you add value to the deal?
The home was dated, vacant, and showed poorly due to lack of any cosmetic upgrades prior to listing for sale. However structurally it was in great condition. Most of the upgrades I made were cosmetic. For instance, every square inch of the home needed to be painted and sections of drywall needed repair. Pressure washing the house, driveway, and patio went a long way too, as well as basic landscaping. Other improvements included basic fixtures repairs and upgrades.
What was the outcome?
The cosmetic results of my upgrades were like night and day. Other investors I know who previously dismissed it saw the house during and after my upgrades and admitted that they made a mistake not trying to scoop this one up. One even offered to purchase at $10k above what I paid, which I may have considered if my brother wasn't the one moving into it.
Lessons learned? Challenges?
I learned a lot since this was my first deal, but the biggest lessons I learned was in regards to the investment of time involved with real estate. Finding deals, running comps, crafting attractive offers, due diligence negotiations, obtaining estimates from vendors and contractors, and then doing the actual repairs and upgrades to prepare the home for a renter... it was a lot, and every step along the way involved a big learning curve. The next one will be a lot easier.
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
In hindsight I should have done more due diligence in choosing a team, but things worked out for this deal. I learned a lot about my own personal hands-on research and negotiation style and what I look for in a team to complement that.
