I'd love to hear about people's first multi family purchase

[Jared S.]

I'm researching the idea of buying a multifamily myself, and I'd love to hear how everyone else got involved...how it worked out, mistakes they made, what they did right, etc. Thanks for sharing!

[Dave Pate]

My first rental property was a historic 1913 duplex, over and under, 4 square style. Advice from other investors at the time concerning the price and age of the house were not very positive. I inherited one tenant and self performed a rehab upstairs. The house was in a good location near downtown.  I kept it rented for about 10 years and managed it myself. I gave it a little bit of cool factor with a few upgraded fixtures which got me top rents in the neighborhood. I had a mortgage and the duplex cash flowed only about $400/month. 

Mistakes: nothing major. Maybe I could have used a contractor for the rehab and gotten it fully occupied sooner. I could have also used a management company.  

Done right: Because this was my first property, I think self managing was a good learning experience. My tenants knew I cared about the property because they saw my face and heard from me often. Tenant screening and paying close attention to credit scores and ability to pay.

Fast forward to putting it on the market last year. I gave it a fresh paint job and it sold (occupied) right away. With a little appreciation and mortgage pay-down on the duplex, I was able to buy a 5 unit building (1031 exchange) and rehab with no mortgage. This is why I love real estate investing: turning $400 per month (with a mortgage) into $2,000 per month (free and clear) and getting a management company working for me.

Now I'm excited to have a free and clear property that I can leverage into something with even better cash flow.