First Real Estate Investment Project (With Updates)
Updated: a day ago
This is my first ever real estate investment and I am super excited to share it with you.
The property was acquired at a discount and needs new floors, kitchen, doors, and bathroom. The deal is structured as a flip and a hold, as such:
The asset is financed by a standard mortgage with a competitive market rate
Extra leverage is supplied to cover the cost of repair, using the same rate
The repairs are to be performed using my own skills as much as possible and using professionals for electricity, plumbing, and as necessary
After the repairs, the property is to be rented out and the project becomes a hold for multiple years to achieve appreciation
The neighbourhood is being heavily invested in and developers are constructing new condos with modern ammenities and creating infrastructure. The landscape is changing and becoming more accessible and attractive. Urban sprawl is currently affecting the new condo prices and in the next few years, I expect this pressure to steadily increase the value of all the properties in the area.
During this time, the property is cashflow positive, all costs are covered and a little bit discretionary income is made on top. Once the appropriate time has passed, I will analyze the property for damage and potential areas of further investment in order to sell it at a higher, market competitive price.
Day 1: January 23, 2020
- A personal mortgage is requested thru a broker
Day 11: February 3, 2020
- COVID-19 becomes a wide-spread phenomenon
- Czech Republic begins banning flights to China
- Banks and other lenders begin getting defensive
Day 106: May 8, 2020
- I create a property walk-around and introduction video
Day 121: May 23, 2020
- The wait is extended as the seller wants to rework the contract and include a new clause
- The change is submitted to their lawyers and must pass thru my lawyer for approval
- The process is extended by an indeterminate amount of time
- It is clear I am in limbo as the property doesn't yet belong to me and the virus slows everything down
Day 152: June 23, 2020
- I am informed the bank has released the money
- The property goes to the land registry to be reassigned into my name. The process is expected to take 21 days minimum (under normal circumstances)
Day 178: July 19, 2020
- The property is still in the register and is expected to clear soon
- I am allowed to make changes to the property under the current owner's permission
- I get bored and start hanging up shelves, sanding the floor, and taking down old fixtures
Day 513: June 19, 2021
- It was decided in 2020 to make this property a flip and hold for appreciation
- The project receives many heavy upgrades including demolition, wall installation, salvaging the old natural wood floors, doors, and frame, as well as piping, new shower, new kitchen.
- All work was performed by myself, save for sanding the old hard wood floors. Note I have experience in renovations and construction. One must learn before doing.