Investment Info:
Single-family residence buy & hold investment.
Purchase price: $77,100
Cash invested: $6,900
Single family home that was brought to me by a wholesaler. Original owner bought it for $80K 5 years prior....completely remodeled the inside kitchen, bathrooms, put on a new deck, and landscaping, and went through a divorce and needed to sell quickly. Sold it to me for $77K and left all her remaining supplies there for me to finish. Scope of work to upgrade unit, needed to drywall and paint the entryway, put on new molding, tore up old carpet in dining room and living room and put down vinyl hardwood flooring. Financing - financed the purchase price through a private lender at 2 points and 9%. Used a 0% credit card to finance the rehab. Rehab took a little over 1 month, and leased out for $1350 per month. New appraisal came in at $127K. Refinanced out @ $95K so $9K left over to go into my next property. Cashflowing $350 per month after mangement, vacancy, maintenance and debt service. Property is 2 blocks away from hospital and only 1-2 blocks away from 2 schools.
What made you interested in investing in this type of deal?
Wholesaler bought me the deal. Took one a look at the property and knew it was very little work for a great price, couldn't turn it down, even though I wasn't really in the market for a deal at the time.
How did you find this deal and how did you negotiate it?
Wholesaler brought me the dealer for $80K. I negotiated and gave them two choices...I'd purchase it for $80K cash if they paid the closing costs, or I'd purchase it for $77K, I would pay the closing costs. They chose the $77K.
How did you finance this deal?
Since I wasn't in the market for the deal at the time, I wasn't sure how I was going to finance it. Ended up reaching out to an investor friend that became a private lender for me at 2 points and 9%.
How did you add value to the deal?
The entryway was unfinished, so finished it by putting on drywall and paint, tore up old carpet and replaced with nice vinyl hardwood flooring, refinished and painted around windows.
What was the outcome?
Property appraised for $127K. Did a "delayed" financing and took out $95K although my total amount into the property was $86K. So $9K extra in my pocket which I will use as a partial downpayment on my next property.
Lessons learned? Challenges?
Stay involved in the rehab. Contractors do multiple projects at the same time if you do not light a fire under them. Could have had it rented out sooner if I would have kept on top of my contractors.
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
My wholesaler finds some excellent deals: Alex Block,
Lender - I used Ruhl mortgage for my delayed financing.
