Sacramento Home Journal

Purva Brown
July 15th, 2007
Investment Properties
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This was our first investment property bought by my husband near Fruitridge. It is a 2 bedroom, 1 bath home, fairly typical of the neighborhood. About 1000 square feet with one purple bedroom and one blue bedroom. The kitchen was green - all in high-gloss paint. But since it was his first home he bought it from HUD in early 2001.

For $50,000.

It was a foreclosed home and everything was in pretty bad shape. But my husband understood instinctively that the rent in his apartment would continue to go up. The payments on this home however would remain the same.

He bought it with $500 of his own money. Since it was a foreclosed home, and he was a first-time buyer he put the rest of his 10% downpayment - $4500 on a credit card (getting a first trust deed for $45,000) and no one noticed. He moved in.

This is what we proceeded to do with the property: we fixed the holes in the walls, refinished the original hardwood floors, changed the drywall in the bathroom, replaced the windows, repainted the inside and the outside, changed the light fixtures, put in a new sprinkler system, landscaped the front and back, tore down the back patio. Then we refinanced and pulled enough money out to use as a downpayment on another house.

In today’s market, that first home is still valued at right around $235,000. Do you want to venture a guess on the return on our original investment?

But it doesn’t end here. We now have monthly mortgage payments of about $1100. The rent we collect is $1050. In a few years, the home will be paid off (or leveraged again to buy another piece of excellent real estate) and we’ll do it again.

So tell me first-time buyers, would you buy a home that looked like this?

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