Real Estate Investing Series: Here is the Deal - The Breakdown

Big Horn Property- Deal or No Deal?

We are so excited to give you the final results of the Big Horn project! If you have not read my initial blog post, make sure you check it out Here

Property Cost Recap

Purchase + Closing costs $65,300

Rehab and Holding Costs $24,309

Total Cost $89,609

Appraised Value $130,000

Honestly, I didn’t think the property would appraise that much. So that was a nice surprise! Our strategy from the beginning was to make this a rental property, but assuming we would have been able to sell the property for appraised value or even at $120k, we would have made a nice profit!

The whole renovation was funded with our Home Depot line of credit, our business credit card and our paychecks. We started renovations 7/11 and rented out the unit on 9/11- exactly 60 days to complete the rehab.

As you will see in the pictures below, we did a lot of work inside and out. New floors, new kitchen and bathroom cabinets, repair walls, paint interior and exterior, resurface tub and shower, new toilets, new gutters, landscape enhancement, among others repairs needed to get the house in habitable conditions.

The reaction we got from prospect tenants was really positive and in just three days we locked-in a really nice tenant for $1,200 rent per month. She even prepaid until December, so we are delighted! We only used Facebook Marketplace to list the property. I love it! It works so well.

Once rented, we were ready to finalize the refinance. We went with Fairway Lending using the Delayed Financing Program. We closed on the loan 10/08 so that was 90 days turn around from purchase, rehab, rent and refinance, not bad!

Loan & Closing Costs $5.208

Total Property Cost with Loan $94,817

Loan Amount $66,000

At the end of the day total cash left in the deal was $28,817 which is really the renovation and the loan closing costs.

The loan we got was a conventional investment loan and we paid $1,200 in points to get a 3.99% interest rate. Our monthly mortgage payment with insurance and taxes is $617.13.

The tenant pays for all utilities and is responsible for landscaping maintenance and all repairs under $200.

Given that everything is basically new, we don’t expect a lot of maintenance and repairs. However, we will still reserve 15% for it. You never know.

We have decided to self-manage this property for the time being and because we listed it ourselves, there was no rental commission fees. However, we are reserving 10% for vacancies. With all this in mind, we will be cash flowing $300/month 😀 which translates to 13% cash-on-cash return. Even if we were to outsource management, this is still a winner 🙂.

Now, Here is the deal… We have a property with appraised value of $130,000 and a loan of $66,000. That’s $64,000 of untapped equity.

The plan is to get a home equity line of credit (HELOC) with that equity so that we can then fund more cash deals. We’ve started relationships with a few banks that have really good programs. So I’ll keep you posted once we get this done.

What’s next…

We wanted to buy one more investment before the end of 2020, but decided that stopping and strategizing was best move we could make at this time.

We used private lenders (friends) to purchase the Big Horn property and we still have a few months in the loan agreement before repayment. They wanted to continue earning interest, so we decided to use the loan proceeds payoff a few other personal loans used to acquire the other properties.

Once these loans are paid off and removed from our credit report, we will be more marketable for loans and lines of credits.

Our goal is to increase our access to cash, so that we can make more aggressive cash offers and/or acquire larger deals.

We are hoarding our paychecks to pay everything off and build cash reserves, so that in 2021, we will be armed with everything we need to make it a great one!

Overall, I am really happy with our first Georgia investment and it’s a good deal in our books. Might not meet the criteria for other investors, but it meets all of OUR investing requirements and that is what matters.

See pictures below of the final product. Before pictures towards the end!

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