Investment Info:
Single-family residence buy & hold investment in Wilmington.
Purchase price: $70,000
Cash invested: $7,200
House purchased Next door to my other property, ARV of 120. Plan to cash out refi when the tenants move out and I renovate.
What made you interested in investing in this type of deal?
After investing in my first deal and paying off loans I was a little strapped for down payment capital. So I was looking at creative ways to fund my next deal.
How did you find this deal and how did you negotiate it?
Basically called around 50 agents looking for owner financing deals, got about 45 no's, some deals fell through, and others wanted too much money. This house happens to be next door to my 1st rental and the same house type so It was easy to understand the deal with that inside knowledge.
When I called the agent said they we're open to all offers so I ran the numbers then made an offer.
How did you finance this deal?
The deal is for $70,000 purchase price, 3 year balloon, 30 year amortization at 6% interest. Used some reserves from the first property to purchase it.
How did you add value to the deal?
Haven't gotten hear yet but the unit is currently renting below market value for a 4BR ($1015.00). I plan to do a renovation when the tenants move out bring it up to market rent (Other house next door brings in $1300) and do a cash out refi. Funny enough the main repairs and expenses were done prior to when I bought it, (new shingle roof last year, Central air, New electrical and plumbing).
What was the outcome?
I have a property that cash flows from day 1 and will give me some capital down the line when I refinance out of it. Not only will I be adding value to this house but my first investment property will get a better neighborhood comp to use during appraisals. After I'm done fixing up this house I plan to put a HELOC on the first house with the new value. All in all solid deal.
Lessons learned? Challenges?
Persistence is probably my favorite thing I learned however. I was slowly paying off debt from my first property but I felt tired of sitting around and feeling like I wasn't doing enough. So I took initiative and worked tirelessly for the past month trying to get a deal and It happened. Don't be afraid to look a little bit outside of your target purchase price as well. Normally I look at houses in the $15,000-$50,000 range so I went slightly outside that mark and was pleasantly surprised.
