Forrest St. Buy-N-Hold
During our Buy-N-Hold phase of the business, we used to search public real estate websites to find investment properties that were listed in the open market. This was one the traditional finds. This was in the ‘C’ category, with 6 – 1bd/1ba units, all rented. It was producing great cashflow and even with hard money loan, it had a great positive cashflow. Hold time was about 23 months.
Buy-N-Hold Details
| Property City: | Sacramento |
| Property State: | CA |
| Purchase Price: | $189,000 |
| Repair Costs | Self Funded |
| Holding Costs: | Self Funded |
| Sale Price: | $265,000 |
| Gross Profit: $60,000 | |
Project Details
Financing Details
Funded with 25% down-payment from personal revolving credit and 75% from Hard Money. With very good positive cashflow, this property self-funded the holding costs.
Rehab Details
This was not rehabbed. It required day-to-day maintenance and during tentant transitions we did the floors and bathrooms for 2-3 units.
Finding the Buyer
As part of sale marketing, we had banners and yard sign through out the duration of the project on the property. Advertised on craigslist and finally put on the MLS. The house was very nicely staged. It had couple of good offer in the beginning but they did not work out. After a few back-and-forth with few potential clients, finally THE buyer came with an ALL CASH, No-Contingencies, 5-days close offer and they did close. This buyer is potential buyer for future projects as well as potential lenders.
Retrospections and lessons learned
Because this was more than 4 units, this is considered ‘commercial’ – which we were not aware of. Everything has a different set of regulations from Loans, to regular inspections, additional maintenance fee etc. So it would be good to know what kind of expenses are going to hit after purchase. Also when dealing with rentals in ‘C’ category neighborhood, one needs to be aware and be prepared to manage the day-to-day situations.
