My first house hack could be a money pit...

[Justin Scull]

Hello All, 

I have been viewing some of the topics online and listening to the podcast, but so far this is my first post!  I was hoping that I could reach out to the BP community to get some feedback on the best way to proceed and work towards my next deal.  

In mid July, I closed on my first house.  It is a 100+ year old duplex close to the downtown area of a small town in Oakland County MI.  Going into it, I had the idea that I would like to get into real estate but hadn't done too much research or cash flow analysis.  Initially, I was attracted by the possibility of having a property that I could live in and rent out the other half to cover my mortgage and help me save money while building equity.  The property in question had a tenant occupying the smaller half of the home and she had a solid rent payment history.  

The property had been a rental for several years and was last sold a little over 10 years ago.  There were definitely some maintenance issues that were identified at closing but nothing too major was noted.  The things that were noted were also given what now appears to be extremely low replacement costs...  

Upon closing on the house, I immediately replaced all of the floors in the lower unit that I would be occupying and began to update some of the electrical outlets and fixtures in the house.  I also began to seek out contractors to evaluate the slight foundation issue that was noted at inspection.  Turns out it is not a cheap fix with bracing but instead an entire replacement of the concrete that covers the original cobble stone foundation.  Quoted out at 10k.  Additionally, I then found a roof leak which due to the location and design of the house is extremely hard to access and will cost about 4k to replace the affected area.  The upstairs unit will need to be updated and fixed when the current tenant moves out in order to get a decent rental rate and tenant.  The water pressure and electrical systems could benefit from replacement and the house is in dire need of a paint job.  

In my mind, the property is still a good investment and for the area that it is in, I believe that I got it for a good price.  However, I would like to refinance in the future and start freeing up funds for other projects.  I bought the duplex for 150k and many of the smaller single family homes in the area are going for over 200k.  What improvements should I make to give me the best return from the bank and what items can wait until they wear out?

Thank you all in advance for your help, 

Best regards, 

Justin