Buy & Hold Duplex - South Phoenix

[John Bradley]

Investment Info:

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

Purchase price: $215,000
Cash invested: $35,000

A duplex was brought to me by my handy dandy realtor from a pocket listing (not for sale yet, just about to hit the market and my realtor knew the details before it was even listed). Previous rents for (2) 3 bed 1 bath units were at $925. Bought the property, renovated 1 unit, moved tenant to vacant unit, reno'd unit 2, increased rents to $1150 (at the time), cash out refi'd and pulled 40k out (appraised for $288,000).

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

Under market rents, off market deal (pocket listing between realtors), room for rent growth and cosmetic updates.

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

My realtor called me on it! Said 'Hey I know you mentioned you're wanting to get into real estate investing so I thought of you when this came up'.

How did you finance this deal?

Conventional Mortgage. 25% down multifamily property.

How did you add value to the deal?

Renovated the interior. Very basic 2 story 3 bedroom 1 bathroom units (2 mini houses on 1 parcel of land) so the main things to update were paint, counters to granite, made the cabinets look better with wood work and paint.

What was the outcome?

Rents are now up to $1350 per month on each unit. The mortgage is $1000 a month and we're self managing the property. C grade property, cash flowing great!

Lessons learned? Challenges?

Stay on top of your tenants. Set very very clear expectations with when rent is due. Find win win solutions for the tenants and yourself. Dont screw them over, treat them like humans. Usually in C grade neighborhoods they have financial struggles which you have to be empathetic with.