Investment Info:
Single-family residence other investment in Duluth.
Purchase price: $90,000
Cash invested: $900
Purchased a foreclosed single family with very little money down using a construction loan.
The purchase price was $90K and the rehab will cost about $15K putting my all in around $105. The ARV appraisal came back at $145K so 75% of the appraisal covered the purchase price, rehab, and closing costs!
The plan is to rehab the property, refinance, and rent it out.
What made you interested in investing in this type of deal?
I wanted to learn how to use construction loans to buy homes for low money down.
How did you find this deal and how did you negotiate it?
It was a bank owned foreclosure posted on the MLS for $124K and I figured if I could get it for less than $100K I could make a deal out of it. The day I went to walk through it they dropped the house to $111K so I offered them $85K. They countered at $95K, so I offered them $90K and they accepted!
How did you finance this deal?
A one year interested only construction loan which covered the purchase price, rehab cost, and the majority (all but $900) of closing costs.
How did you add value to the deal?
I will be managing the construction rehab which will greatly increase the market value of the property. I was able to add value/ equity immediately by purchasing for less than market value.
What was the outcome?
TBD - the goal will be to refinance in 6 months and keep as a rental.
Lessons learned? Challenges?
It is possible to finance deals for little to no money down by utilizing construction financing. I'm sure the upcoming rehab will teach me some lessons!
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
I acted as my own agent and worked with Kathryn Gunderson at Republic Bank in Duluth - she's great!
