Great Buy & Hold near Harrisburg, PA

[Jessie Ellis]

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $129,900
Cash invested: $10,000

Contributors:
Jessie Harder

3-Unit rental property in Enola, PA - within a few miles of Harrisburg, PA. Was purchased through a 203K loan and house hacked. Rehabbed and lived in the first floor unit and rented the other two (that fully covered the escrowed mortgage payment). Made some small, but impactful modifications to the property to heighten the quality of tenants. Now have all three units rented. Pro Forma cap is ± 15.83%; Purchase Cap Rate is ± 18.88%.

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

Due to a large amount of student loan debt, we had to think creatively regarding a place to live, as buying in the traditional sense was not feasible.

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

This deal was on the MLS. Another investor owned it and was looking to liquidate in order to use the money for another deal; I believe he was looking to building new residences somewhere.

How did you finance this deal?

I was able to get a first-time home buyers 203K loan (3.5% down).

How did you add value to the deal?

This deal was "house hacked", allowing me to live for free. While in the unit, I upgraded all of the finishes and added a washer and dryer.

What was the outcome?

I later moved into a home of my own. This property is now fully rented and profitable with long-term tenants.

Lessons learned? Challenges?

During the closing process, I had tried to get the FHA 203k Construction Loan... the property was actually in "too good" of a condition so I didn't qualify. The current challenge, which we're hoping to refinance soon, lower our rate and get rid of the mortgage insurance, that is a requirement of the FHA loan (costing us about $82/mo).