First Property, Personal housing cost slashed!

[Derek Roche]

Investment Info:

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

Purchase price: $115,000
Cash invested: $13,000

Duplex property that had been severely neglected by previous owner, Both section 8 units and the whole property were in need of several repairs that were ignored C of O violations. As well as generally ill kept and need of rehab on the interiors. This is my first property and Live in rehab duplex. PITI $966. Old rent was $975. Section 8 Tenant in one unit pays $950. Rehabing 1 unit at a time for LTR. End goal should cash flow $1000.

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

I wanted to get out of renting an apartment and spending $975 for my own housing. I knew I could get a duplex that provided myself housing while having a tenant cover most if not all the mortgage. Additionally, I felt I needed a garage for personal property/ tool/ workshop space. I also needed a properrty with a large enough driveway to park my 35ft converted school bus on. - I currently live in the bus as I rehab the property. 

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

MLS, Worked with a realtor. Local market had very little interest in the property. I was able to make an under asking offer which the seller originally rejected. The seller crawled back several weeks later and accepted my offer and contingencies.

How did you finance this deal?

Traditional 30 year fixed mortgage @ 4.875% with 5% down.

How did you add value to the deal?

Currently, working on the rehab of the upper unit. Replacing fiberglass top and surround with steel tub and tiled shower, new tile floor, vanity and lighting. TO DO: Kitchen- Will replace cabinets and counters. Whole Unit: new flooring (budget of $7k)

Lower unit will need similar rehab and budget.

What was the outcome?

Still in the process of rehab. But personal housing cost are slashed. I just pay my utilities. Hoping to refi after rehab and pull capital back out and repeat.

Lessons learned? Challenges?

Make low ball offers if I know there is little interest in the property. Hire a painter and cleaner next time. This section 8 tenant is proving difficult to get payment out of and is combative.

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

Yes, please contact for realtor or lender recommendation.