Investment Info:
Single-family residence buy & hold investment.
Purchase price: $205,000
Cash invested: $42,992
This deal was my first after really finding BiggerPockets, reading Gary Keller's Millionaire Real Estate Investor and narrowing my search criteria.
I had made my mind to buy quality homes that I would live in myself. 1980 or newer, Single Family Detached, 3 Bedroom, 2 Bathroom, 2 Car Garage, Single Story, 1200-1800 SF, in good middle class neighborhood, good schools, no private pool. I have more specifics but this was my criteria at the time.
What made you interested in investing in this type of deal?
I was looking for a distressed property: short sale or foreclosure. They were drying up all over the Phoenix Valley in 2015 and still are but I really liked the zip code 85085 for growth and the home was in a developing area.
How did you find this deal and how did you negotiate it?
Found on the MLS as a short sale.
How did you finance this deal?
Conventional 30 Year Fixed Rate, 20% Down; Profit from a previous short term Buy & Hold
How did you add value to the deal?
Updated/added new flooring, updated backyard landscaping, painted inside of home
What was the outcome?
Positive Long Term Cash Flow Play.
Looking into possible Refinance and/or HELOC soon with equity available
Lessons learned? Challenges?
1031 Exchange:
You don't have to go bigger! I chose not to do a 1031 exchange because I was selling a property that sold for $210K and wanted to purchase something under $200K. Everything I read and everyone I spoke with said it couldn't happen. Come to find out I could have done a 1031. I would have simply owed taxes on the difference of the sold and new purchase price.
$10K Capital Gains Lesson Learned!!
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
I represented myself on this transaction. I am never too busy for your referrals!
When representing yourself in a short sale as the buyer's agent:
Figure out commissions on short sales early on. More often than not the buyer of short sales can't earn a commission. Be sure to figure this out early. I was able to get the seller's agent to provide a referral fee for my entire commission due.
