I was at my desk working when my phone buzzed.
It was a text from an old friend, a fellow infantry officer I had served with on the 26th MEU. We had been in the same small group at church for a couple of years. We had deployed together, trained together, and stayed close long after the Marine Corps stopped telling us where to be.
He had a house. He thought I might want to buy it.
I had already helped him find a tenant for that property once before. He knew what I was building. And when he was ready to move on, he did not call a real estate agent. He called me.
That text led to one of the cleanest, most straightforward deals I have ever done. No renovation. No surprises. No drama. Just a well-located house, a good price, immediate equity, and a tenant already in place.
After five deals that included bad financing, bad management, a $20,000 loss on manufactured homes, a permitting nightmare, and a wholesale I wish I had kept, this was the deal that confirmed my system was working.
This post is part of my First 10 Real Estate Deals series, where I break down what actually happened, not polished success stories.
👉 First 10 Real Estate Deals -- Series Hub
Deal Snapshot
Item | Details |
|---|---|
Year / Market | 2022 -- Holly Ridge / Onslow County, NC |
Property Type | Single-family home |
Purchase Date | March 23, 2022 |
Purchase Price | $215,000 |
Down Payment | $51,656 |
Closing Costs | $4,300 |
Total Cash Invested | $55,956 |
Immediate Equity | ~$20,000 |
Initial Rent (2022) | $1,300/month |
Peak Rent | $1,900/month |
Current Rent (2025) | $1,595/month |
Current Market Value | ~$266,000 |
Total Appreciation | $51,000 |
Strategy | Turnkey long-term rental |
Total ROI (3 Years) | 110% |
The Story
How I Found the Deal
This deal came from a relationship, not a listing.
My friend had owned this property for several years. I had helped him place a tenant early on. He later moved back into the home himself, then had to relocate again, placed his own tenant, and managed it himself for a period of time. Eventually he decided he did not want to be a landlord anymore.
Because of our history together, he came directly to me. There was no negotiation theater. No competing offers. No listing agent taking 3%. Just a straightforward conversation between two people who trusted each other.
We agreed on a price, I ran my numbers, it passed my criteria, and we closed.
Due Diligence
Because I had prior involvement with this property, I had more context than a typical buyer. I knew the neighborhood. I knew the general condition. I knew the rental demand in that market because Cedar Ridge was already operating there.
What I verified before closing:
Tenant payment history and lease status
Current condition of the property
Comparable rents in the immediate area
HOA fee structure and any pending assessments
The property needed no rehab. The tenant was in place and paying. The numbers worked at the purchase price.
One thing I noted going in: the HOA fee was higher than I preferred. That was a known tradeoff, not a surprise. I accepted it because everything else about the deal was clean.
Financing and Execution
This was a straightforward conventional purchase. I put 25% down, paid closing costs, and closed with a total cash investment of $55,956.
There was no rehab phase. No contractor coordination. No vacancy period. The tenant stayed, the lease transferred, and the property was cash-flowing from day one.
This is what a turnkey deal is supposed to look like.
Financials (Reality Check)
Acquisition
Purchase Price: $215,000
Down Payment: $51,656
Closing Costs: $4,300
Total Cash Invested: $55,956
Current Performance (2025)
Monthly Rent: $1,595
Annual Rent: $20,322
Operating Expenses (excluding mortgage): $5,232
Net Operating Income: $15,091
Annual Debt Service: $13,800
Annual Cash Flow: $1,291
Monthly Cash Flow: $107.59
Rent History
Initial Rent (2022): $1,300/month
Peak Rent: $1,900/month
Current Rent: $1,595/month
Rents increased sharply after purchase, then pulled back as new apartment supply came online. This is a normal cycle. It is also a reminder that rent growth is not linear and must be underwritten conservatively. Over longer periods, rents trend upward. Short-term fluctuations are expected.
Equity and Total Return (3 Years)
Appreciation: $51,000
Loan Paydown: ~$6,750
Cash Flow: $3,873
Total Return: $61,623
Investor Metrics
Cash-on-Cash Return: 2.3%
Total ROI: 110%
Effective Annual ROI: 36.7%
DSCR: 1.09
Cash-on-cash return looks modest at 2.3%. Total ROI at 110% over three years tells the real story. This is why I do not evaluate deals on monthly cash flow alone. Most of the return in this deal came from appreciation and debt paydown, not what showed up in my bank account every month. If you want to see how I calculate total return correctly, you can use my Real Estate Deal Analyzer.
Wins and Losses: My Lessons Learned
Lesson 1: Move-In Documentation Is Non-Negotiable
When the tenant eventually moved out, the process was harder than it needed to be. We did not have a clear move-in inspection from the previous owner. Without documented move-in condition, enforcing charges becomes difficult and creates friction.
I now treat move-in documentation as a negotiating point when buying tenant-occupied properties. If the seller cannot produce a signed move-in inspection, I account for that risk.
Lesson 2: Small Physical Features Drive Leasing Performance
This property has a fenced backyard. That single feature has made it easier to rent than comparable units in the same community. Tenants with pets and families specifically request it.
Details like this directly affect vacancy rate and tenant quality. When I evaluate properties now, I pay close attention to features that make a home easier to rent, not just features that affect purchase price.
Lesson 3: Expenses Are Not Static
Insurance increased significantly in 2024 and compressed cash flow. The deal still performs well overall, but this reinforced the need to stress-test expense assumptions at purchase, not just use a single-year snapshot. This is something I always model inside my Real Estate Deal Analyzer. If your underwriting does not account for expense growth, your projections will be wrong.
Lesson 4: Relationships Create Off-Market Advantages
This deal never hit the MLS. It came from a text message from a friend who trusted me. The price was fair. The friction was minimal. The execution was clean.
I cannot manufacture that kind of deal flow. But I can invest in relationships over time so that when a friend is ready to sell, I am the first call. That is a compounding advantage.
Lesson 5: A Validated System Creates Confidence
By Deal #6, I had clear criteria: minimum 15% total ROI in Year 1, immediate equity at purchase, strong rental demand, and a property I could hold for decades. This deal met every requirement.
That is not luck. That is a system working the way it is supposed to. The criteria exist precisely so that when a deal passes, I can move quickly and confidently.
What I Do Not Like About This Deal
The HOA fee is higher than my other properties. As fees increase over time, they will continue to compress cash flow. That is a long-term risk I accepted knowingly, but it is worth naming honestly.
HOA-governed properties also carry the risk of special assessments, rule changes, and external decisions that affect your asset without your input. I prefer properties where I have full control.
How This Deal Changed My Future Deals
Relationships are the best source of deal flow. Stay visible, stay helpful, and stay genuine with the people in your network.
Turnkey deals are not boring. They are efficient. Not every deal needs a renovation to produce strong returns.
A validated buy box removes hesitation. When a deal meets your criteria, you move. When it does not, you pass.
Would I Do This Deal Again?
Yes, without hesitation.
The overall return is strong. The property has performed exactly as intended. It has required minimal oversight and created no major problems.
More importantly, it gave me confidence. After several deals that tested me in different ways, this one showed me that disciplined buying produces predictable results. That is the whole point.
My Plan Going Forward
Option 1: Pay It Off. Pay down the loan and convert this into a strong cash-flowing asset with minimal risk. A paid-off property at $266,000 in value with $1,595/month in rent is a powerful long-term hold.
Option 2: 1031 Exchange. Once equity reaches around $100,000, sell and complete a 1031 exchange into a larger asset such as a small apartment building or manufactured home community.
Key Takeaways
Relationships create deal flow that listings cannot replicate
Turnkey deals can outperform renovation plays on total ROI
A validated buy box lets you move fast when the right deal appears
Cash-on-cash return is not the whole story -- calculate total return
Expense growth is real; stress-test it at underwriting
Move-in documentation protects you at every tenant transition
PS: Why Rents Trend Up Over Time
If you zoom out over any 10-year period, rents tend to rise. This is not an accident.
We operate in a system where the money supply expands over time. As more dollars are created, the purchasing power of each dollar declines. Housing costs, including materials, labor, insurance, and land, rise with it. Rents follow.
Short-term supply and demand can cause fluctuations, as we saw in this deal when new apartment inventory pushed rents down from their peak. But the long-term trend has consistently moved upward.
This is one of the core reasons I invest in real estate. It allows me to own assets that adjust with inflation while using long-term fixed-rate debt that becomes cheaper over time in real terms.
What is Next
In Deal #7, I break down the deal where I got overconfident, skipped steps I knew better than to skip, and paid for it through a permitting denial, a forced renovation pivot, and a property I am still working to exit.
👉 Deal #7: The Deal Where I Got Cocky and Paid for It
Looking back at the previous deal in this series: Deal #5: The $33,380 Duplex That Built My Deal-Finding System
