Vacant Duplex in Temescal, FHA financing

[Brent Tarnow]

Investment Info:

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

Purchase price: $750,000
Cash invested: $30,000

Vacant duplex purchased with FHA loan in Temescal neighborhood in Oakland. Owner-occupied for 9 months and refinanced out of FHA to conventional financing (so I could use FHA financing on next deal). Modest cosmetic upgrades for value-add. Has cash-flowed ever since.

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

House-hacking, plus FHA financing for low down payment

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

Found the off-market opportunity while touring another property, just asking questions of the agents and meeting as many people as I could

How did you finance this deal?

FHA

How did you add value to the deal?

New roof and some electrical upgrades. But the rest of the value-add came from small cosmetic upgrades -- expanding driveway, fixing fence, landscaping, etc.

What was the outcome?

Still holding it, refinanced again, cash-flowing nicely

Lessons learned? Challenges?

If you can do FHA financing, do it. PMI is a small price to pay for getting into a Bay Area property for ~$30k. You can always refinance later.