Investment Info:
Single-family residence buy & hold investment.
Purchase price: $21,252
Cash invested: $45,000
I'm doing a complete remodel of a little two bedroom home, including some new foundation work. This has been a great learning experience because I'm doing most of the work myself. Its still a work in progress but I'm working a little each day after working at my W-2 job and on weekends. Hope to be able to post pictures at some point in the next couple months.
What made you interested in investing in this type of deal?
Since my early 20's (I'm now 47) I've been interested in real estate investing. I read Rich Dad Poor Dad, like most new investors, and got inspired by this book. In early 2018 I started listening to the BiggerPockets podcast and my desire to get started in real estate grew stronger. I've since read numerous books on real estate investing and loving it.
How did you find this deal and how did you negotiate it?
In may of 2018 I found a house that looked pretty run down and unoccupied. I checked the local GIS system and located the owner and contacted her. She was willing to sell and asked $25,000.00 for the 2 bed 1 bath house (1041sft) After speaking to a couple friends about the asking price they advised I offer $20,000.00 based on the amount of rehab needed. We settled on $21,252.00 which was the payoff that she needed to get out of the bank loan.
How did you finance this deal?
I paid the full amount from savings... I wish I would have thought to just assume the bank loan and save my cash for the rehab. Instead I've refinanced my primary home and borrowed from my 401k to get the money needed to complete the rehab.
How did you add value to the deal?
So far I've done some pretty major foundation repairs including completely waterproofing the foundation walls and replacing several rotted sections of the seal plate and several joist. Also in the process of a complete remodel including all new wiring, plumbing, flooring, HVAC, appliances, lighting and cabinets.
What was the outcome?
Well... I'm still in the process. I'm doing most of the work myself, saving a LOT of money but I'm putting a lot of time into the project. According to the numbers this house will be worth $110,000.00 to $120,000.00 and my total investment would be just under $70,000.00
Lessons learned? Challenges?
1) I wish I would have known about and sought a more creative way to finance this project.
2) Although I've learned SO much during this rehab I hope to be able to pass a lot of this work off to the professionals on my next project.
3) Can't wait to start the next one!!
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
Not really... I've spoken to real estate professionals in the area and found the after renovation estimate to be around $120,000.00