Investment Info:
Single-family residence other investment.
Purchase price: $140,000
Cash invested: $52,000
Sale price: $300,000
This property was my first house hack, my wife and I bought this farm to fix up and used as our home for 4 years. As for the house my wife and I did 90% of the renovation which was a complete gut and fixup on the main floor. The property had outbuildings that we also fixed up and rented out for commercial use.
What made you interested in investing in this type of deal?
The property had 15 acres and multiple outbuilding that we knew could add value to the property of they were fixed up and use for commercial property to rent out. The property was overgrown with trees, by simply removing the trees and cleaning up around the farm we had almost instant equity. Flipping the house was always the goal when purchasing any house at the time.
How did you find this deal and how did you negotiate it?
We found the property on the MLS when the market was low and buyers had the upper hand. We negotiated the seller down from $180,000 to $140,000. The seller was motivated.
How did you finance this deal?
Being a House Hack we were able to do a 30-year Conventional Loan with only 5% down.
How did you add value to the deal?
We gutted the main floor of house and fixed it up doing 90% of the work ourselves with some help from family and friends. We spent money and time cleaning up around the farm removing trash and overgrown trees. After clearing trees, we were able to rent out 5 acres as crop rent to the surrounding landowner. We also fixed up the 3 outbuildings on the property to rent out for livestock and commercial use.
What was the outcome?
The outcome was far better than we expected. Adding up the cashflow from the outbuilding rent over five years and equity gained we profited almost $180,000 after the property was sold.
Lessons learned? Challenges?
We learned a lot of valuable lessons from this property...
1. Land value is going up at a fast rate and more and more people are wanting to get away from the city life and purchase land to live on.
2. Doing little things and putting in some sweat equity such as spending 2-3 days cleaning the property can give you the best ROI.
3. Working with renters is challenging and sometimes annoying but it was a must needed learning experience for myself.
