Before we get to the deal, I wanted to explain why this property is property number 2 and the title is Let’s Try This Real Estate Thing Again. I talk about this at the end of Our Story.
Purchase Date: 7/14
The Deal:
This property was pretty simple. I was looking for a rental to get back into the game after 4-5 years away. I called up an investor friend and asked him if he had anything he would part with. He offered me this house for $20,000 Cash, but he was willing to take $5,000 in payments. I was looking for a property, and I knew I couldn’t get financed at the time, so I took the deal. I wouldn’t buy in this neighborhood again, but I have learned a lot of lessons from this property and it appraised at $62,000 after owning it for 10 years.
How Did We Find The Property?
I called up an investor friend of mine and asked him what the cheapest property was that he had. He gave me a list, and this was the cheapest one so I took it.
How Did We Fund The Property?
I paid cash, and I made payments on the remaining $5,000, but basically, it was a cash transaction. I was able to pay cash for this property after saving for 2 years, getting a tax refund, and selling some stock.
How Did We Fix The Property?
We bought this property with a tenant in it. The only repairs we did are those that were a part of normal maintenance. After I owned this property for 8 years I did have to put a new roof on it. This is when I learned that I wanted higher-end properties. Even though I had paid cash for the property, in 2018, after I paid for taxes, insurance, management, and a roof, I lost money on a paid-off property. From that moment on, I radically changed the way I bought and analyzed properties. The reality is, that a water heater may cost $800 on a place that rents for $750 or $1,500, so I wanted to start buying houses with higher rents.