Investment Info:
Condo buy & hold investment in Austin.
Purchase price: $199,900
Cash invested: $40,000
This property was something I stumbled into when reconnecting with my partner C.J. after being apart for 7 years, and my goodness has it been a learning experience. A little history on the house; C.J. purchased this property with some help from her parents and a standard home loan at an incredible deal, especially for a 1,722 SF Condominiums, 3 minutes from Dell Computer's headquarters, in North East Austin, Texas. The property continued to increase in value at an astonishing rate, and when COVID-19 took Austin's Housing Market into the Strata... Well, let's just say out of this World-A Sphere, we were ready and waiting to sell, and here's why. The timing of our rekindled relationship was both perfect, and traumatic. Only 5 months after we got back together, and 2 weeks after I got my Insurance Adjuster's License, Central Texas was struck by the most random freeze-pocalypses in history. How is that at all positive, you might ask? Well, Just like many other homes affected by the freeze in our area, every water pipe in our house burst, causing ten's of thousands of dollars in damages. "Theo... I'm still waiting for the silver lining here." The reason why that's a positive thing is, with a bit of recently gained Insurance Policy Knowledge and some estimate writing skills, we were able to have all the damages covered by insurance, giving us a stepping stone to both restoring the property and building our rental property empire. One of the hardest parts of the whole process, besides not having power in below freezing temperatures for 3 days, has been choosing to sell or hold and rent this delectable piece of real-estate. We first went with sell and put the house on the market in the first week of August. Two major factors contributed to our decision; The way COVID was affecting the market in Austin at the time we were ready to sell, and a very generous offer from our contractor to foot the bill for the remaining property repairs, since we remodeled the whole darn thing, with the idea we would pay him back after closing and would sell through a realtor he recommended. Needless to say, the second the property hit the market, interest was fast a furious, with offers coming in 15K over asking price only a couple of days after the posting date. However, the story starts to get weird and has been weird ever since. The first offer we agreed to was very strong; Pre-qualified, great credit,1k down in earnest money and gave themselves a 5-day back out period to show their enthusiasm. However, 1 day later, after signing the contract, they pulled out! We couldn't fathom the reason why, as the property was listed at 340K and had all new... well, EVERYTHING! Shaking it off, we carried on and almost immediately after putting the house back on the market we had another offer at asking. A little less strong of an application, but having it off the market for 2 weeks and a documented buyer back out put us in a bit of a bind. The second buyer pulled out less than 1 week before closing due to "financial reasons", and loosing $4,400 in the process. At this point, we are seriously asking ourselves if we are making the right move to sell or if this is a sign from the Universe that we need to hold on to this property, cash out refinance, pay our contractor and use the remaining money from the 170K in equity to purchase a small multifamily rental property that we will BRRRR.
What made you interested in investing in this type of deal?
The stars aligned in such a way that I had both the income from work, specialized knowledge in property insurance and an opportunity to build a partnership with a home-owner.
How did you find this deal and how did you negotiate it?
I romanced my way into it...
How did you finance this deal?
A high-income Job and insurance money.
How did you add value to the deal?
A high-income Job, Knowledge of Insurance Process, Estimate Writing/Claims Handling that increased insurance pay-out 30K over original settlement offer.
What was the outcome?
Property was fully renovated which gave the opportunity to either sell at higher price or cash-out refinance for increased equity value.
Lessons learned? Challenges?
Never allow fear to get in the way of your success. If we had chosen to rent from the beginning we would have been able to use the money not spent on making the property sell-ready towards renovations/expenses on our next BRRRR Property, but we were to afraid of getting into more debt after such a serious loss. Always do the math!!!!! Selling/buying/flipping/renting is an emotional process that can only be checked by numbers. Every great system is built on checks and balances.
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
Vanisa Garcia
(512) 318-7400
https://www.realtor.com/realestateagents/Vanisa-Garcia_Austin_TX_2241522_746294002
