Second Duplex bought, was a great learning experience for me

[Rick Casady]

Investment Info:

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

Purchase price: $139,000
Cash invested: $35,000

This was my second duplex/rental, the seller lived in one side and rentented out the other, both units were in fair shape with some deferred maintenance. I learned a lot about business on this one, I inherited a "professional tenant" I didn't even know what that meant until then (very expensive education).

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

The price to rent ratio on duplex's in this area of Michigan was very high not because the rents are so high but because the cost to purchase is so low, this duplex is in a great school district and the cost per sqft was $77 (while cost to build was $150ish)

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

This was off the MLS

How did you finance this deal?

30yr 4.75% via my bank

How did you add value to the deal?

Repaired the pet damage, found a tenant that was willing to pay rent

What was the outcome?

This is a long term hold for me now

Lessons learned? Challenges?

Challenges: "Professional tenants" do exist! there goal is to withhold rent, make landlords spend money in courts, then make partial payments to get out of court, then rinse and repeat! To clarify a Profession is different than people having actual problems in there lives that make it so they cant pay.
Lessons Learned: You can't trust everyone. If your investment strategy only works if the tenants pay the rent, then be prepared to evict when they don't.