Update: closing on our first duplex

[Jim Peckey]

Hello BP,

I'm writing to post an update to this post, and share the details of our first deal.  

We were originally looking at a triplex in our local area (linked post), although the seller wasn't willing to budge on the price - even after making 2 offers with the second being a bit higher, so we walked.  Fast forward a few weeks, we found a great duplex that we were able to get our offer accepted on - we're pretty excited!

The duplex we found was listed for $75k, built in 1900, was fully rented and is a 2/1 down and 1/1 up.  During the initial walk-through, it was pretty obvious that it needed some work - our REA told us it was an investment property that just wasn't getting the regular maintenance that it needed.  The downstairs unit is in decent shape, however, the basement & upper unit need some work.  In the basement, there's a section of the wall, where the upper 3rd (above ground) is being pushed in - it looks like the wood has rotted out.  In the upper unit, the tenant has lived there for a number of years and smokes inside the unit - it's definitely going to need some work to address the cigarette smoke/tar build up.  There's a relatively small list of minor/cosmetic repairs that will need to be made, but that doesn't bother us so much, we're willing to put the work in.

The house had been on the market for just under a month and after the initial walk-through, we made an offer the same day at $65k with a home inspection contingency.  The offer was accepted the following day.  We scheduled the home inspection a few days later, which came back clean & had listed the issues we had already identified during the initial walk-through - it was extremely helpful having a REA that also invests in real estate, manages his own properties and knows what to look for during a home inspection.  Based on the home inspection report, we asked the seller for a $1,200 concession, which they agreed to.

So we've managed to snag the duplex for $63.8k.  We we plan on putting $8-10k into it and will be able to gross $1400 a month in rents (800 for the lower unit, 600 for the top).  We plan on house hacking the bottom unit while we do the repairs and within the next year or so, purchasing another multi-family property to wash, rinse & repeat.

Financing was done through Navy Federal Credit Union, where we were able to put down 15% on a 30yr conventional @ 4.5% interest rate - with closing costs, we're looking bringing ~15k cash to the table.   In BP fashion, here's a snippet from the numbers we ran via the buy & hold calculator:

We joined the BP community late last year and have learned so much from the webinars, podcasts and from folks here on the forums - for that, we would like to express our gratitude and appreciation for all those folks who've helped us along the way!  Within a few months, we were able to literally spring board into Real Estate Investing and we're extremely happy with how things are turning out at this point.

Cheers,