House Hack Duplex 2

[Michael Paling]

Investment Info:

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

Purchase price: $118,175
Cash invested: $26,900

I have moved out of my first duplex I was house hacking after purchasing another almost identical duplex on the same decommissioned air force base. This second place needs a bit more work than my first, so it'll be a good project for a while. It quite easily met the 1% rule and one unit was already rented while the other was vacant and ready for me to move in (but it's definitely a smelly place.....). Once I eventually move out, it should bring in $200 to $300 in cashflow as of current projections. It took only about 2 weeks to get my first duplex rented, so now it's on to the next phases of this adventure!

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

I bought my first duplex last year with the intent of only being there a year and then move on to the next place. I tried buying in the "big city" for our area, but kept getting beat out and decided to look again at the lower priced markets. The duplexes in this area cashflow pretty well still.

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

MLS, but it was an investor from out of town that's been selling his portfolio one by one to try and create his own comps. I offered $500 over asking, was still not the highest offer, but had the favored loan type and no inspection. If this place wasn't almost identical to my first property, I would not have waived the inspection. The appraisal came in $2,500 lower than my offer, so I countered at the appraisal price and we split the difference between that and my initial offer.

How did you finance this deal?

Conventional loan. I learned though that these duplexes are not ones Fannie/Freddie will loan on due to them being "Condominiums", although no one considers them condos. They're technically in condo associations, but they're not active associations and some have been disbanded.

How did you add value to the deal?

Still in the process. Need to paint exterior, replace garage doors, and other repairs. I'm also using Dion McNeely's binder strategy to raise rents because the current tenant is paying $625 when market rates are over $825.

What was the outcome?

I snagged my next long term investment, successfully filled my first vacant rental unit, and took a couple more important steps in building my financial freedom.

Lessons learned? Challenges?

I learned more about bank lending, found a great lender that I will definitely go back to again, also found a great Realtor who kept me from buying stupid houses.

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

Absolutely. If anyone is in my local area and wants to chat, send me a message.