Investment Info:
Single-family residence buy & hold investment.
Purchase price: $50,000
Cash invested: $60,000
This is a 1/1 600ft new construction short term rental located at Norris Lake, TN. It was setting vacant and purchased halfway through construction process with it being a shell of a home. It was finished, furnished, and placed on Airbnb leveraging a property manager. Besides being rented in the summer because it's close to Norris Lake, it was pleasantly surprising to find it rented throughout the year due to no hotels in the closest town.
What made you interested in investing in this type of deal?
With it being halfway built during COVID, I was able to do a new construction home fairly quickly. The bonus was it's on a double lot, so if the first property performs well then a second could be built without buying more land.
How did you find this deal and how did you negotiate it?
I knew the area very well and had driven by the property multiple times. My wife is a full time realtor and found the owner through tax records. After sitting down with the owner, we discovered the elderly woman had lost all her money due to a contractor taking advantage of her and then leaving town. She needed money to be able to get full time healthcare services. She were able to work a deal that provided the money she needed and a price that worked well for us.
How did you finance this deal?
For construction and furnishing, used a HELOC on my primary property. After six months, refinanced into a traditional mortgage.
How did you add value to the deal?
When completing the construction, sent extra on granite countertops, luxury vinyl flooring, added a concrete patio and driveway. Since the was to create a short term rental, added additional touches such as smart TVs, quality furniture, and a fire pit.
What was the outcome?
Has performed very well, always receives 5 star reviews, and after completing construction realized $60K in equity.
Lessons learned? Challenges?
I really liked having a new construction property for a short term rental since first impressions are critical.
Having a property manager has made having a short term rental much more enjoyable.
