Single-family residence buy & hold investment in Portland.
Purchase price: $89,000
Cash invested: $15,000
This was during the hayday of banks trying to get assets off of their books. This one went up for sale and we owned the one directly next door. They put the asking offer for what we bought the other house for. We just said, hey, let's throw a number at them that looks intelligible, that was 89k. They didn't even counter, they just took it. Probably one of our best buys of all time.
What made you interested in investing in this type of deal?
At the time there were not a lot of buyers. People were still wondering when the bottom would hit. To us, we knew we could get the rent to cover the mortgage payment, so even if it ended up being worthless it was still an income-producing asset. It worked.
How did you find this deal and how did you negotiate it?
This was on the MLS and we owned the house next door. We are always keen on buying real estate that is close to each other so we always have searches going for the neighborhoods that we already own. This also gives you a good idea on what your home is worth seeing all the comps come up.
How did you finance this deal?
Cash, then used a credit partner to refinance the deal. The mortgage is in his name and we own the property.
How did you add value to the deal?
This deal was just the right timing. All the value was already in the property, it just was a problem to the bank. We fixed the siding and the roof and got it rented out pretty quickly. The bank just wasn't able to deal with it and probably had bigger properties to work on.
What was the outcome?
The outcome of this is that we still own it today and its cashflows. Our principal is reducing with every month of rent.
Lessons learned? Challenges?
Don't be afraid to throw an offer out there. We were expecting a counter and would have picked it up for much more. But the bank just said ya, that sounds good. The other lesson is that if you aren't looking and making offers you'll never get one accepted. We were in the right place at the right time, only because we put ourselves there. Sure, there's a little luck involved, but my father always said at golf, I find the more I practice the luckier I get.
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
We worked with Mike Maier with Guild Mortgage for the refinance. At this time we had gotten our own brokers license and had another agent helping us out but getting a good chunk of the commission.
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