Purchase Date: 2/22
The Deal:
Originally the seller had 6 properties in a package, they ended up only being willing to sell 5 of the properties. The seller was asking for $235,000 for the package, and I ended up negotiating them down to $220,000. The agreement was supposed to close prior to the end of 2021, but the seller ended up having a lot of title issues that they needed to clear up before closing. The package consisted of three two-bedroom homes, one three-bedroom home, and one five-bedroom home. The properties were all rented and the rents were $500, $550, $800, $500, and $700, two of which were section 8 properties.
How Did We Find The Property?
At the end of 2021, I asked my realtor if she knew anyone selling any homes, I was looking to double our portfolio in one year and we needed 6 more houses to do it. My realtor told me she did have a deal that was 6 houses, which I immediately wanted to pursue. Out of the five properties, four were in areas I was open to, but didn’t have any properties currently. However, I liked that four had basements, three had fenced-in yards, and two of them had garages.
How Did We Fund The Property?
In order to purchase the properties we took out a hard money loan that covered 90% of the purchase price, the remaining amount we had from rents on other properties, as well as using a credit card strategy where we liquidated thousands of dollars to help fund the downpayment. As a result, we knew we needed to get in, rehab several of the properties, and then refinance out of the hard money loan at the end of the six-month loan term.
At the end of the hard money loan, while trying to refinance, we were only able to refinance two of the five properties, because two of the properties didn’t appraise for the minimum loan amount (which was $75,000), and one of the properties I knew wouldn’t appraise, so I never even had it appraised. Once refinanced, I was able to take out enough money on two of the properties to pay off the third property, and the other two properties I had to pay cash for. I didn’t have the $75,000 needed to pay off the final two properties, so I had to wait until two other refinances went through, and once they did, I paid off the hard money loan (with none of my own money) and now own three of the properties in this package free and clear.
This property was actually appraised for $74,000 after the rehab.
How Did We Fix The Property?
This was one of the section 8 properties. At this point in our investing, we were not accepting section 8 tenants, so we offered the tenant an out on their lease, which they took. We immediately started rehabbing the property. We had to remove multiple trailers full of junk, repaired all of the natural hardwood floors, painted the entire house, and installed new counters and appliances in the kitchen, as well as an all-new bathroom. It was definitely worth it, as you can see from the before and after rent.
Before Video:
Unfortunately, I forgot to take a before video, but you may be thankful for that, it was nasty!
Update List:
- Replaced Multiple Windows
- All New Appliances
- All New Counters
- Painted all Windows, Cabinets, Trim, Doors, Etc
- Repaired all Hardwood Floors
- Installed all new Ceiling Fans & Light Fixtures
- Installed New Light Switches/Outlets/Covers
- Installed New Toilet, Exhaust Fan, Sink, etc in the Bathroom
- Cleaned Basement
- Powerwashed Siding & Back Patio
- New Outside Patio Steps
- Tons of Landscaping