Hello BP, after many months of reading, listening to podcasts, and scrolling through the MLS, I closed on my first investment property today. It has taken a little longer than I had hoped, largely due to COVID, but I loved every part of the process and am already looking forward to expanding my rental portfolio in the future! I will go into great detail on my deal below. If you have any questions or would like to connect, please feel free to reach out!!

Investment Info:

3 unit multi-family in Reading, Pennsylvania.

Purchase price: $195,000
Cash invested: $21,727

The property has three one bedroom apartments with square footage of approx. 1400, 1200, and 600. Each unit has recently been renovated, and the larger two units have exposed brick walls and 10 foot ceilings. All utilities are paid by the tenants. The property also came with the parcel of land next to it, which is currently used for off-street parking but could potentially be built on later down the road. I will be living in the 1,200 square foot unit for a year (FHA requirement) and rent out the other two.

Financial Breakdown

While living at the property:

Rent: $1,450
PITI: $1,095
Property Manager: $101.50
Vacancy: $145
Repairs: $150
Capital Expenditures: $150
Monthly Income (Loss): ($191.50)
Cash on Cash Return: -10.5%

When moved out of the property:

Rent: $2,325
PITI: $1,095
Property Manager: $162.75
Vacancy: $232.50
Repairs: $150
Capital Expenditures: $150
Monthly Income (Loss): $534.75
Cash on Cash Return: 29.5%

What made you interested in investing in this type of deal?

House hack - My older brother currently house hacks a duplex in the area and he recommended I house hack as well. After looking into the idea more, it became a no-brainer. Not only with this allow me to practically live for free, but it will be a great educational experience and my first stepping stone in building a strong portfolio of rental properties.

How did you find this deal and how did you negotiate it?

MLS. We put an above asking offer on the house just a few days after it was listed. Due to the lack of supply of homes on the market during COVID, there was a bidding war (which I thankfully won!) I was willing to go above asking price because the property still matched the financial criteria that I was looking for.

How did you finance this deal?

FHA loan of 3.5% down. Appraisal came in lower than the sale price so I had to pay $5,500 out of pocket in order to make the difference. Despite paying that extra $5,500 at close, the numbers on the deal are still great!

Lessons learned? Challenges?

Don't get down if things aren't initially going your way. This was my seventh offer on a home and the first one to be accepted. The worst thing you can do is get down on yourself and give up because you've lost a few. If you keep looking and keep making offers, one will eventually be accepted and all of the hard work will be worth it! You may need to change your strategy or location, but you can always make something work.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

I worked with the Zimmerman team of SlateHouse Realty and highly recommend them (Sheldon and Ruth Ann). I had a million questions for them through this process, and they were always kind, responsive, and informative. Sheldon is a rental property owner himself who specializes in investment properties, and he gave me the confidence I needed in getting my first deal.

Below are links to Sheldon's page on BiggerPockets as well as his page with SlateHouse.

BP - https://www.biggerpockets.com/users/SheldonZ3

SlateHouse - https://www.slatehouserealty.com/sheldonzimmerman/

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