First Investment Property

[Michael Paling]

Investment Info:

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

Purchase price: $112,000
Cash invested: $23,876

This is my first property purchase as a house hack. I'm living in one unit while the other is being rented (long-term section 8 inherited tenant), with plans to rent out an additional room in my side. PITI is almost fully covered by the other unit, so rent from the room in my unit will help cover maintenance and repairs. I'll be living for free!

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

I read Rich Dad Poor Dad many years ago. I didn't dive into all the teachings from it back then, but one thing I've always wanted to do since then was purchase a duplex like this scenario. I finally kicked myself in the butt to start doing something and now I realize that I was more than prepared for this first purchase. I'm already dreaming about my next one!

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

MLS and minimal negotiating needed.

How did you finance this deal?

conventional loan and personal savings for the DP.

How did you add value to the deal?

working towards renting out that extra room. I've almost completely painted the shared space (boy did it need that!) and working to fix things all over.

What was the outcome?

This has been smoother than I ever imagined. Started shopping in March, looked at 3 properties, offered on 2, bought 1 in June. The previous owner already was raising rents to the market rate, and one tenant wouldn't pay that, so he was already moving out. I was able to move in 1 week after closing. The remaining tenant has been easy so far (yes it's still early to fully tell) and the local Section 8 case workers have been pretty easy to work with.

Lessons learned? Challenges?

Starting to learn how to handle maintenance requests (and when to say no). learning a lot regarding painting. How to remove a garbage disposal (and not replace it). What's needed to patch a tar and gravel roof (I'm still working on this one).

How to start building a REI business (bookkeeping, tracking, documenting, etc.). How to write a lease. How to work with section 8. I could really keep going, but I'm running out of character spaces to write here.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Local real estate agent and bank lender, but I'm going to shop around more on who I'll work with for my next deal. I didn't really dig very long for contacts, which turned out ok this time.