Investment Info:
Single-family residence buy & hold investment.
Purchase price: $164,437
Cash invested: $34,000
The goal here was a value-add single family rental. Through the process of rehabbing the home, top to bottom, $40,000+ in immediate equity was built and we anticipate over $4,000 per year in cash-flow. It also is the historically desirable Como Park neighborhood in Saint Paul, with good appreciation potential. x
What made you interested in investing in this type of deal?
After spending years managing a very old (1870s built) high maintenance duplex, we decided it was time to re-position our equity gains into 2 easier-to-manage mid-century built single family rental properties in Class A areas. Our goal with each single family property was to build ~40k in equity through improvements on each project in a short time (2-4 months rehab) and then place tenants. (We had originally purchased the duplex for $145,000 in 2014 and sold it for $280,000 in 2018)
How did you find this deal and how did you negotiate it?
On the MLS. It had been overpriced and the seller was dropping the price each week or so, indicating seller motivation. It was an estate. When we saw it, it was 190k and we put it under contract, based on a very short inspection. When I walked through with my wife who acts as our general contractor/project manager, we realized the rehab cost was much higher than I initially calculated so we sent a cancellation form, along with the number that made sense for us. They called back the next day!
How did you finance this deal?
We used a small commercial lender who also helped finance most of our repairs
How did you add value to the deal?
We renovated the interior and exterior from top-to-bottom, adding about ~40-45k in equity.
What was the outcome?
We have a completely updated, easy to manage SF rental in a great A location that cashflows about $350 per month.
Lessons learned? Challenges?
We learned to always verify plumbing and electrical numbers. We made some mistakes estimated what we thought those would be and some of the costs actually doubled. And, double and triple check the refrigerator from the "appliance package" works with the new cabinet frame and drawers. (We had to get a smaller "custom" fridge that was another $700)
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
Yes, we have many contractors and connections we'd be happy to recommend
