I had a friend who wanted to sell me his first house after building a new home. He was planning on keeping the first house as a rental, but he ended up not having the time to manage a rental property and wanted to sell it for $105,000.
The house was 3 bedroom, 2 bath, and I knew the purchase price would work. At the moment I bought it, I had some extra cash that I was wanting to invest, so I put down more than I normally would. A side note—I later refinanced the property to pull some cash back out for another investment. Below is more of the house’s financial breakdown at the time we bought it:
Purchase Price: $105,000
Down Payment: $50,000
Amount Borrowed: $55,000
Monthly Rent: $850
Monthly Payment: $322
Monthly Free Cash Flow: $280
The house was a pretty strong rental property for us, but I wasn’t a big fan of the neighborhood it was in. After two years of owning it, I sold the house for $133,000 and ended up making a good $20,000 in profit, plus all of the rental income along the way. While this house was only a short-term hold, it was still a great addition to my portfolio at the time and helped me take a solid step forward.