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
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Many unexpected repairs
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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
