I made a lot of mistakes on this deal, but still ended up with $16,000 in equity and a $300 monthly cash flow. I purchased a 4-bedroom fixer from FNMA for $34,500.
My first mistake was I spent too much on repairs to the tune of $20,000. So now I was into the property for $54,500.
My second mistake was I rented it out to a friend with a family of six. In six months, they ruined the new carpeting and blinds I had put in.
I decided to sell the place and got $70,500 for it after two weeks on the market. I carried a second that pays me about $300 a month. My biggest profit on the deal, however, was the valuable lessons I learned:
- Don’t make improvements that don’t increase the value of the property.
- Don’t rent to friends or anyone with tons of kids or pets.
- Be sure to collect a sufficient deposit to cover potential damage.
- Have a strategy in place before acquisition of the property.
Keep it up because if you can screw up like I did and still make money, you know it’s a great business.