This deal was sourced on market, secured with Owner Occupied Conventional financing.  Monthly cash flow ranges with the season; First year generated a 21.9% Cash on Cash Return.

Real Estate Investing Case Study | Angle Lake AirBNB

Deal Overview

• Sagareus Advisor purchased this property off the MLS
• Initial plan was to House Hack this property by renting out the mother in law unit
• Long term appreciation was a key determining factor; New light rail going in

This picture got me emotionally attached to the deal 

View from back dock

Deal Source

• MLS - Offer made within hours of listing; Mutual on Day 1 of listing
• Purchased Price - $700k with 10% down

Initial Analysis

• Live upstairs and rent out the lower level
• Wait for appreciation

Dated, but appeared to be well maintained 

Due Diligence

• Confirmed Rental Comps
• Accepted deal AS-IS; Inspection for verification purposes only.
• Very little diligence due to competitive market

Financing

• Conventional, Owner Occupied loan
• 10% down, 30 years fixed, 3.75% interest

Full mother in law unit downstairs with slider out to lake + dock

Stabilization

• Many unexpected repairs

• Roof, deck, basement, plumbing, burglary

Short Term, Vacation Rental was the way to go on this property

Outcome

• With lake side property, we decided to converted to an AirBNB
• First year income - $18,834.23
• ROI = $18,834.23 / $86,000 = 21.9%

Lesson(s) Learned

• Don't get emotionally attached to a deal
• Don't underestimate repair costs, especially if everything looks dated but in good condition
• Always consider multiple exit strategies
• Be careful of budget creep

I originally set out to buy a $200k condo and ended up with a large, waterfront home.

• Highest and best use for many residential properties is currently short term rentals