My First Deal MA Investing

[Ryan Breen]

I’ve been off this forum for a little while, but have continued to listen to podcasts, read and watch the market for my next deal. I plan to be around more and hopefully meet some more investors and continue on the path of investing. I made my first purchase 2 years ago, and I figured I should go back and go over the details.

So my original plan was to buy a multi family and house hack. But that’s not what ended up happening. My aunt decided to sell her house as I was looking for a property and offered me a great deal. It is a 3 bed 1 bath single family in Holyoke, MA. But connected to other single families in a set of brick row houses built in 1915. Side note this home has been in my family for 3 generations before me so that is kind of cool.

She was willing to sell to me for around 40k. Couldn’t pass up this deal. What comes next was huge and I hope it can help out someone else in a similar situation because it is not often talked about, and I had no idea about this method. I did some research and made some calls and came across a gift of equity. In simple terms if the house appraises for more than sale price, if seller signs a gift of equity to you, you can use this equity to use as a down payment. Amazing. It took a few dozen times of explaining it to her for her to agree since she didn’t really understand, although nothing effected her negatively since she was already giving me the deal. The appraisal came back at 70k I believe.

The sale was written up for 62,000 with a gift of equity of 12,400 and a seller credit of 3,720 for closing. My loan came out to 44,000. I put almost nothing down on the house and was able to get into a conventional loan with no PMI and as I only had the cash for a 3.5 FHA loan. I didn't have to deal with some of the restrictions that loan comes with, and no PMI!. My mortgage with insurance is under 500 dollars a month. So not how I originally planned to house hack, but so much cheaper than a crappy apartment that would have cost me 1300 dollars a month and no long term gain.

The house is old and has cracked plaster and wallpaper everywhere. So far I have redone the bathroom and one of the bedrooms upstairs, and am working on the dining room now. Next will be kitchen which will cost a good amount but it’s terrible now. Not a single cabinet. I will also be taking out a useless closet and possibly taking out a wall to the pantry and laundry room and extending the kitchen, and moving the laundry downstairs. Doing all the work my self as I do carpentry but it has been slow with other things going on, I’m trying to speed it up and keep moving. I also just had my oil tank start to leak as it’s 70 years old, I patched temporarily but I’ll need to replace and that’s going to cost me a good chunk of change. I am really curious on what my house will appraise for after I do some more of these improvements.

I am now watching the market and trying to plan my next move as well. I am unsure if I want to buy a new home and sell this one, or if I will keep it for a rental. I’m sure I could get good rents for this as a single family, although a bit less as it’s connected and no driveway, also a so so area, so I am deciding on if I want to deal with a rental in an area like this. But I think this might be the way to go.

If that’s the case I may buy a fixer upper to live in with a bigger yard for us and the dog, and maybe do the same there, fix up and rent when I move on or sell depending on what works best. But I would also like to try and acquire more rentals during living at that next property as well if possible.

If there’s any details I left out or questions you have let me know. I figured I should put this out there as I did finally make a purchase 2 years ago and I am focused on the future of my real estate journey. I look forward to meeting some more like minded investors